HomeMy WebLinkAboutItem 33 - Pension Debt Refinancing and Related Bond Financing Finance and Management Services
https://www.santa-ana.org/finance
Item # 33
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
March 16, 2021
TOPIC: Pension Debt Refinancing and Related Bond Financing
AGENDA TITLE:
Adopt a Resolution Authorizing Judicial Validation Proceedings for the Proposed Pension
Debt Refinancing and Related Bond Financing Agreements
RECOMMENDED ACTION
Adopt a resolution authorizing the Issuance of Bonds to refund certain pension obligations
of the City, up to the estimated Unfunded Actuarial Liability (UAL) as of June 30, 2021,
approving the form and authorizing the execution of a trust agreement and purchase
contract, and authorizing Judicial Validation Proceedings relating to the issuance of such
Bonds and approving additional actions related thereto.
EXECUTIVE SUMMARY
The City Council has adopted the Unfunded Employee Pension Liability Cost Reduction
Policy, and has retained specialized legal counsel. The next step to refinance the City’s
pension debt is to adopt the proposed Resolution and related agreements authorizing the
judicial validation process, which could take up to six months to complete.
During the judicial validation process, the City Council will consider selection of an
underwriter and approval of the Preliminary Official Statement for the bond offering.
DISCUSSION
On February 2, 2021, City Council directed staff to move forward with the pension
refinancing. On February 16, 2021, the City retained specialized legal counsel (Stradling
Yocca Carlson & Rauth) for the refinancing. The next action of the City Council is to
adopt the resolution, which authorizes legal counsel to begin the judicial validation
process with Orange County Superior Court. The resolution also approves the form of
the Trustee Agreement and Bond Purchase Contract for the proposed bond issue.
Judicial Validation Proceedings
California public entities do not have specific authority to issue bonds to refinance pension
debt. Pursuant to the judicial validation process, the Court will issue a judgment
Pension Debt Refinancing and Related Bond Financing
March 16, 2021
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confirming that the contract with CalPERS and the pension UAL are each an “obligation
imposed by law” under the State Constitution which can be refunded under the provisions
of the Government Code, which permit local agencies to refund outstanding debt without
additional voter approval. Unless challenged, the judicial validation proceedings are
largely administrative managed by special legal counsel.
Under normal circumstances, the validation proceedings take approximately 90 days.
Due to the pandemic, we have assumed the process could take up to 6 months.
Summary of Validation Proceedings:
File Validation Action with Orange County Superior Court
Receive Order for Publication of Summons from the Court
Legal publication for 21 consecutive days
Waiting period for ex parte application to file default judgment
Clerk enters default judgement and schedules a hearing (Hearing for default
judgement and entry of judgment
Appeal Period (30 days)
Work Performed Concurrently with Validation Proceedings
The City will conduct a competitive procurement process for an underwriter and
recommend one or more underwriters for the refinancing. The underwriter initially
purchases the bonds from the City at a discount expressed as a fraction of a $1,000 bond
and resells the bonds to investors for a profit.
Once the City contracts with an underwriter, the financing team will prepare the
Preliminary Official Statement (POS), which is the offering document that must contain
all material information enabling investors to make an informed purchase decision.
The City can sell the refunding bonds only after the Validation 30-day Appeal Period has
ended, and the City Council approves the POS.
Agreements to Be Approved With Proposed Resolution
There are two documents attached to the proposed Resolution.
Bond Purchase Agreement – City Council approves the form of terms and
conditions for selling the bonds to the underwriters. The financing team will finalize
the agreement upon bond pricing. (Exhibit 3)
Trust Agreement – City Council approves the form of terms and conditions for the
Trustee to register, transfer, and pay the bonds. US Bank is the Trustee for
existing City outstanding bonds. The financing team will finalize the Trust
Agreement upon bond pricing and execution of the Bond Purchase Agreement.
(Exhibit 2)
Pension Debt Refinancing and Related Bond Financing
March 16, 2021
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Maximum Refinancing Amount to Authorize
The proposed resolution and attached agreements must identify the maximum amount of
the debt refinancing. As recommended by staff, the City Council adopted Unfunded
Employee Pension Liability Cost Reduction Policy includes a refinancing cap of 90% of
the debt. The most recent actuarial valuation received from CalPERS calculates the
pension debt as a total of $707 million at June 30, 2019 for the miscellaneous and safety
plans combined. Using the FY19-20 CalPERS investment return of 4.7% for FY19-20,
and the assumed return of 7.0% for FY20-21, the CalPERS Pension Outlook Tool
estimates the City’s pension debt at June 30, 2021 will be $744 million.
The maximum refinancing amount to be authorized is $672 million ($670 million
represents the Principal balance), calculated as 90% of the $744 million plus up to $2
million for costs of issuance paid from refinancing proceeds. The City Financial Adviser
has provided a good faith estimate confirming the up to amount for a potential debt
issuance (Exhibit 4).
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
If the City issues approximately $672 million in bonds, the total cash flow savings is
projected as follows:
On a Net Present Value (NPV) basis, savings over 25 years is approximately $182
million. If comparison is made between “Estimated total reductions in payments vs.
CalPERS estimate of payments”, the City projects to save approximately $223 million.
Furthermore, the savings assumptions noted above is based on the bonds carrying an
average rate of three percent (3%), assuming current interest rates as of March 2021,
with the actual rate subject to market conditions at the time of pricing.
EXHIBIT(S)
1. Resolution
2. Trust Agreement
3. Bond Purchase Agreement
4. Good Faith Estimate
Submitted By:
Kathryn Downs, Executive Director Finance and Management
Services
Approved By: Kristine Ridge, City Manager
Resolution No. 2021-XXX
Page 1 of 6
RESOLUTION NO. 2021-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA AUTHORIZING THE ISSUANCE OF BONDS TO
REFUND CERTAIN PENSION OBLIGATIONS OF THE CITY,
APPROVING THE FORM AND AUTHORIZING THE
EXECUTION OF A TRUST AGREEMENT AND PURCHASE
CONTRACT, AUTHORIZING JUDICIAL VALIDATION
PROCEEDINGS RELATING TO THE ISSUANCE OF SUCH
BONDS, AND APPROVING ADDITIONAL ACTIONS
RELATED THERETO
WHEREAS, the City of Santa Ana (the “City”) has previously adopted a retirement
plan pursuant to the Public Employees’ Retirement Law, commencing with Section 20000
of the Government Code of the State of California, as amended (the “Retirement Law”)
and elected to become a contracting member of the California Public Employees’
Retirement System (“PERS”); and
WHEREAS, the Retirement Law and the contract (as amended, the “PERS
Contract”) effective July 1, 1948, between the Board of Administration of PERS and the
City Council of the City (the “City Council”) obligate the City to (i) make contributions to
PERS to fund pension benefits for certain City employees, (ii) amortize the unfunded
accrued actuarial liability with respect to such pension benefits, and (iii) appropriate funds
for the foregoing purposes; and
WHEREAS, the City desires to authorize the issuance of its City of Santa Ana
Taxable Pension Obligation Bonds, Series 2021 (the “Bonds”) pursuant to the provisions
of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California
Government Code, commencing with Section 53570 of said Code (the “Bond Law”), in a
maximum principal amount not to exceed that required for the purpose of refunding all or
a portion of the City’s current obligation to PERS for fiscal year 2021-22 and/or 2022-23,
as applicable, pursuant to the PERS Contract, to pay all or a portion of the unfunded
accrued actuarial liability of the City (the “Unfunded Liability”) with respect to pension
benefits under the Public Employees’ Retirement Law and the PERS Contra ct, to pay
capitalized interest on the Bonds and to pay the costs of issuance of such Bonds,
including the underwriter’s discount and any original issue discount on such Bonds; and
WHEREAS, the City expects that the need may arise in the future to issue
additional refunding bonds (the “Additional Bonds”) pursuant to the Bond Law to amortize
the accrued and Unfunded Liability of the City to PERS as required by the Retirement
Law and the PERS Contract and to fund all or a portion of the normal contributions
required by the PERS Contract; and
WHEREAS, the Bonds will be issued under and secured by a Trust Agreement
(such Trust Agreement, in the form presented to this meeting, with such changes,
EXHIBIT 1
Resolution No. 2021-XXX
Page 2 of 6
insertions and omissions as are made pursuant to this Resolution, being referred to herein
as the “Trust Agreement”) by and between the City and a trustee to be selected by the
City (the “Trustee”); and
WHEREAS, the City has determined the advisability of filing an action to determine
the validity of the Bonds, the Additional Bonds and the Trust Agreement, and the actions
proposed to be taken in connection therewith; and
WHEREAS, in compliance with SB 450, the City has obtained from its Municipal
Advisor the required good faith estimates and such estimates are disclosed and set forth
in an attachment to the staff report submitted herewith ; and
WHEREAS, all acts, conditions and things required by the laws of the State of
California to exist, to have happened and to have been performed precedent to and in
connection with the consummation of the financing authorized hereby do exist, have
happened and have been performed in regular and due time, form and manner as
required by law, and the City is now duly authorized and empowered, pursuant to each
and every requirement of law, to consummate such financing for the purpose, in the
manner and upon the terms herein provided,
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa
Ana as follows:
The City Council does hereby find and declare that the above recitals
are true and correct.
The issuance of the Bonds on the terms and conditions set forth in,
and subject to the limitations specified in, the Trust Agreement, is hereby authorized and
approved. The Bonds shall be dated, shall bear interest at the rates, shall ma ture on the
dates, shall be issued in the form and shall have terms as provided in the Trust
Agreement, as the same shall be completed in accordance with this Resolution. The title
of the Bonds may be changed to reflect the year in which the Bonds are issued, and to
reflect the appropriate series designation, as directed by the City Manager of the City.
The Trust Agreement, in substantially the form submitted to this
meeting and made a part hereof as though set forth in full herein, is hereby approved.
The Mayor of the City, or such member of the City Council as the Mayor may designate,
the City Manager of the City, the Executive Director of Finance & Management Services
of the City, and their authorized designees (the “Authorized Officers”) are, and each of
them is, hereby authorized and directed, for and in the name of the City, to execute and
deliver the Trust Agreement in the form presented to this meeting, with such changes,
insertions and omissions as the Authorized Officer executing the same may requ ire or
approve, such requirement or approval to be conclusively evidenced by the execution of
the Trust Agreement by such Authorized Officer. The City Clerk of the City is hereby
authorized and directed to attest the Trust Agreement for and in the name and on behalf
of the City. The City Manager of the City and the Executive Director of Finance &
Resolution No. 2021-XXX
Page 3 of 6
Management Services of the City are each hereby authorized to work with the Municipal
Advisor (as identified in Section 8 hereof) to select the Trustee for the Bonds.
The City hereby authorizes and approves the issuance of Additional
Bonds pursuant to the Bond Law, as authorized by the Trust Agreement, from time to
time, to refund all or a portion of the Unfunded Liability and the City’s obligation to PERS
pursuant to the PERS Contract for the then-current fiscal year, provided that the City
Manager, or his or her designee, first certifies to the Council in writing that such actions
will result in cost savings to the City. The City authorizes any one of the Author ized
Officers, or their designees, to execute and deliver one or more other trust agreements
and/or one or more supplemental agreements supplementing or amending the Trust
Agreement and providing for the issuance of Additional Bonds (each an “Additional Trust
Agreement”); provided, however, that (i) each series of Additional Bonds shall be in a
principal amount not to exceed the sum of the Unfunded Liability of the City to PERS
under the PERS Contract and the Retirement Law remaining unpaid on the date of
issuance of such Additional Bonds, the obligation to PERS for the fiscal year in which the
Additional Bonds are issued pursuant to the PERS Contract, and the costs of issuing the
Additional Bonds, (ii) the stated interest rate on the Additional Bonds shall not exceed the
discount rate assumed by PERS with respect to the amortization of the Unfunded Liability
at the time such Additional Bonds are issued, and (iii) the Additional Bonds issued
pursuant to such Additional Trust Agreement shall mature not later t han 30 years from
the date of their issuance.
Each Unfunded Liability refunded by the Bonds and each series of Additional
Bonds pursuant to the Trust Agreement and each Additional Trust Agreement constitutes
an obligation imposed by law, pursuant to the Constitution and laws of the State of
California and an obligation of the City not limited as to payment from any special source
of funds. The Unfunded Liability refunded by the Bonds pursuant to the Trust Agreement
and each series of Additional Bonds pursuant to an Additional Trust Agreement shall not,
however, constitute an obligation of the City for which the City is obligated or permitted to
levy or pledge any form of taxation or for which the City has levied or pledged or will levy
or pledge any form of taxation.
The form of the Bond Purchase Agreement (the “Purchase
Contract”) by and among the City and an underwriter or underwriters to be selected by
the City (the “Underwriter”) presented to this meeting and on file with the Clerk and the
sale of the Bonds to the Underwriter pursuant thereto upon the terms and conditions set
forth therein is hereby approved, and subject to such approval and subject to the
provisions hereof, the Authorized Officers are each hereby authorized and directed to
evidence the City’s acceptance of the offers made by the Purchase Contract by executing
and delivering the Purchase Contract in said form with such changes therein as the
Authorized Officer or Authorized Officers executing the same may approve and such
matters as are authorized by this Resolution, such approval to be conclusively evidenced
by the execution and delivery thereof by any one of the Authorized Officers. The City
Manager of the City and the Executive Director of Finance & Management Services of
the City are each hereby authorized to work with the Municipal Advisor to select the
Underwriter for the Bonds.
Resolution No. 2021-XXX
Page 4 of 6
The Mayor of the City, the City Manager of the City, the Executive
Director of Finance & Management Services of the City, and their designees, are each
authorized, on behalf of the City, to establish and determine (i) the final principal amount
of the Bonds, provided the aggregate initial principal amount of the Bonds shall not be
greater than the lesser of (a) $673,000,000 or (b) the sum of the City’s obligation to PERS
for the remainder of fiscal year 2021-22 and/or 2022-23, as applicable, as evidenced by
the PERS Contract, and the Unfunded Liability as calculated by PERS or other actuary
selected by the Authorized Officer, together with the costs of issuing the Bonds as
approved by such Authorized Officer, (ii) the final interest rates on various maturities of
the Bonds, provided that the net present value savings achieved through refunding the
Unfunded Liability by issuing the Bonds shall be at least 3% (or such higher amount
required by the City’s Debt Management Policy) of the Unfunded Liability and that the
maturity date of the Bonds shall not be later than the last date through which PERS has
determined for the amortization of the Unfunded Liability of t he City in accordance with
its current procedures; and (iii) the Underwriter’s discount for the purchase of the Bonds,
not to exceed 0.400% of the principal amount of the Bonds. The net present value
savings shall be calculated by comparing present value of the payments required to
amortize the Unfunded Liability at the discount rate assumed by PERS to the present
value of the principal and interest payments on the Bonds.
The Mayor of the City, the City Manager of the City, the Executive
Director of Finance & Management Services of the City, and their respective designees
are hereby authorized to negotiate and execute an insurance policy and/or a debt service
reserve fund insurance policy for the Bonds (and such other agreements that may be
required by the insurer in connection therewith) if it is determined that the policies will
result in interest rate savings for the City, and to pay the insurance premium of such
policies from the proceeds of the issuance and sale of the Bonds.
Stradling Yocca Carlson & Rauth, a Professional Corporation, is
hereby retained to act as Bond Counsel and Disclosure Counsel to the City, and Urban
Futures, Inc., is hereby retained to serve as Municipal Advisor to the City. The Authorized
Officers are, and each of them is, hereby authorized to execute a contract with Stradling
Yocca Carlson & Rauth in substantially the form on file with the Clerk, together with such
changes as may be approved by the City Manager, the City Attorney, or their designee,
which changes shall be deemed approved by the execution and delivery of such contract
by the City Manager.
In order to determine the validity of the Bonds, the Additional Bonds,
the Trust Agreement and the Additional Trust Agreements, and the actions authorized
hereby to be taken in connection therewith, the City Council hereby authorizes the City
Attorney, in concert with Stradling Yocca Carlson & Rauth, Bond Counsel, to prepare and
cause to be filed and prosecuted to completion all proceedings required for the judicial
validation of the Bonds, the Additional Bonds, the Trust Agreement and the Additional
Trust Agreements in the Superior Court of Orange County, under and pursuant to the
provisions of Sections 860 et seq. of the California Code of Civil Procedure. The City
Council further authorizes the Authorized Officers and all other officers, employees and
agents of the City to take any and all actions, including the exe cution and delivery or
Resolution No. 2021-XXX
Page 5 of 6
appropriate documentation, as may be required to conclude such judicial validation
proceedings.
The Authorized Officers are, and each of them hereby is, authorized
and directed to execute and deliver any and all documents and instrum ents and to do and
cause to be done any and all acts and things necessary or proper for carrying out the
transactions contemplated hereby, including, but not limited to, the preparation of an
Official Statement (and a Preliminary Official Statement) for use in connection with the
offering and sale of the Bonds, the execution and delivery of a continuing disclosure
undertaking and the execution and delivery of any documents required by PERS in order
to complete the issuance of the Bonds and the refunding of the Unfunded Liability.
All actions heretofore taken by the Authorized Officers and by any
other officers, employees or agents of the City with respect to the issuance of the Bonds,
or in connection with or related to any of the agreements or documents referenced herein,
are hereby approved, confirmed and ratified.
This Resolution shall take effect immediately upon its adoption by
the City Council, and the Clerk of the Council shall attest to and certify the vote adopting
this Resolution.
ADOPTED this _____ day of ____________, 2021.
________________________________
Vicente Sarmiento
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
By:
John M. Funk
Sr. Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers
Resolution No. 2021-XXX
Page 6 of 6
CERTIFICATION OF ATTESTATION AND ORIGINALITY
I, DAISY GOMEZ, Clerk of the Council, do hereby attest to and certify the attached
Resolution No. 2021-XXX to be the original resolution adopted by the City Council of the
City of Santa Ana on _______________.
Date: ______________________ ________________________________
Clerk of the Council
City of Santa Ana
4846-5351-8811v3/200434-0005
TRUST AGREEMENT
by and between
CITY OF SANTA ANA
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
Dated as of __________ 1, 2021
Relating to
$__________
CITY OF SANTA ANA
TAXABLE PENSION OBLIGATION BONDS, SERIES 2021
EXHIBIT 2
TABLE OF CONTENTS
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4846-5351-8811v3/200434-0005
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.01 Certain Defined Terms .............................................................................................. 1
Section 1.02 Other Definitional Provisions .................................................................................. 13
ARTICLE II
THE BONDS
Section 2.01 Issuance of Bonds; Form; Dating ............................................................................ 13
Section 2.02 Description of the Bonds ......................................................................................... 13
Section 2.03 Interest on the Bonds ............................................................................................... 14
Section 2.04 Medium of Payment ................................................................................................ 14
Section 2.05 Form ......................................................................................................................... 15
Section 2.06 Additional Bonds ..................................................................................................... 15
ARTICLE III
EXECUTION, AUTHENTICATION AND EXCHANGE OF BONDS;
BOOK ENTRY BONDS
Section 3.01 Execution and Authentication; Registration ............................................................ 15
Section 3.02 Transfer or Exchange of Bonds ............................................................................... 15
Section 3.03 Book-Entry Bonds ................................................................................................... 16
Section 3.04 Mutilated, Lost, Stolen or Destroyed Bonds ........................................................... 18
Section 3.05 Destruction of Bonds ............................................................................................... 18
Section 3.06 Temporary Bonds .................................................................................................... 18
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01 Notices to Trustee; Notices to Bondholders; Notices to DTC ................................. 19
Section 4.02 Optional Redemption of Bonds ............................................................................... 19
Section 4.03 Mandatory Sinking Fund Redemption of Bonds ..................................................... 20
Section 4.04 [Make-Whole Redemption of Bonds ....................................................................... 20
Section 4.05 Payment of Bonds Called for Redemption; Effect of Redemption Call .................. 22
Section 4.06 Selection of Bonds for Redemption; Bonds Redeemed in Part ............................... 22
ARTICLE V
APPLICATION OF PROCEEDS;
SOURCE OF PAYMENT OF BONDS
Section 5.01 Application of Proceeds and City Contribution ....................................................... 23
Section 5.02 Sources of Payment of Bonds; Semi-Annual Payments by the City ....................... 23
ARTICLE VI
CREATION OF CERTAIN FUNDS AND ACCOUNTS
Section 6.01 Creation of Costs of Issuance Fund ......................................................................... 24
Section 6.02 Creation of Revenue Fund and Certain Accounts ................................................... 24
Section 6.03 Creation of Redemption Fund ................................................................................. 25
Section 6.04 Moneys Held in Redemption Fund .......................................................................... 25
TABLE OF CONTENTS
(continued)
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4846-5351-8811v3/200434-0005
Section 6.05 Unclaimed Moneys .................................................................................................. 25
ARTICLE VII
CONCERNING PAYING AGENT
Section 7.01 Paying Agent; Appointment and Acceptance of Duties .......................................... 25
Section 7.02 Paying Agent - General Responsibilities ................................................................. 25
Section 7.03 Certain Permitted Acts ............................................................................................. 26
Section 7.04 Resignation or Removal of Paying Agent and Appointment of Successor ............. 26
ARTICLE VIII
COVENANTS OF THE CITY
Section 8.01 Payment of Principal and Interest ............................................................................ 26
Section 8.02 Performance of Covenants by City; Authority; Due Execution .............................. 27
Section 8.03 Instruments of Further Assurance ............................................................................ 27
Section 8.04 No Inconsistent Action ............................................................................................ 27
Section 8.05 No Adverse Action .................................................................................................. 27
Section 8.06 Maintenance of Powers ............................................................................................ 27
Section 8.07 Covenants of City Binding on Successors ............................................................... 28
Section 8.08 Trust Agreement to Constitute a Contract ............................................................... 28
Section 8.09 City to Perform Pursuant to Continuing Disclosure Certificate .............................. 28
ARTICLE IX
INVESTMENTS
Section 9.01 Investments Authorized ........................................................................................... 28
Section 9.02 Reports ..................................................................................................................... 29
Section 9.03 Valuation and Disposition of Investments ............................................................... 29
Section 9.04 Application of Investment Earnings ........................................................................ 29
ARTICLE X
DEFEASANCE
Section 10.01 Discharge of Bonds; Release of Trust Agreement ................................................... 30
Section 10.02 Bonds Deemed Paid ................................................................................................. 30
ARTICLE XI
DEFAULTS AND REMEDIES
Section 11.01 Events of Default ..................................................................................................... 31
Section 11.02 Remedies.................................................................................................................. 31
Section 11.03 Restoration to Former Position ................................................................................ 32
Section 11.04 Bondholders’ Right to Direct Proceedings on their Behalf ..................................... 32
Section 11.05 Limitation on Bondholders’ Rights to Institute Proceedings ................................... 32
Section 11.06 No Impairment of Right to Enforce Payment .......................................................... 32
Section 11.07 Proceedings by Trustee Without Possession of Bonds ............................................ 32
Section 11.08 No Remedy Exclusive ............................................................................................. 33
Section 11.09 No Waiver of Remedies ........................................................................................... 33
Section 11.10 Application of Moneys ............................................................................................ 33
Section 11.11 Severability of Remedies ......................................................................................... 34
TABLE OF CONTENTS
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4846-5351-8811v3/200434-0005
Section 11.12 Additional Events of Default and Remedies............................................................ 34
ARTICLE XII
TRUSTEE; REGISTRAR
Section 12.01 Acceptance of Trusts ............................................................................................... 34
Section 12.02 Duties of Trustee ...................................................................................................... 34
Section 12.03 Rights of Trustee ...................................................................................................... 35
Section 12.04 Individual Rights of Trustee .................................................................................... 36
Section 12.05 Trustee’s Disclaimer ................................................................................................ 36
Section 12.06 Notice of Defaults .................................................................................................... 36
Section 12.07 Compensation of Trustee ......................................................................................... 37
Section 12.08 Eligibility of Trustee ................................................................................................ 37
Section 12.09 Replacement of Trustee ........................................................................................... 37
Section 12.10 Successor Trustee or Agent by Merger.................................................................... 38
Section 12.11 Registrar ................................................................................................................... 38
Section 12.12 Other Agents ............................................................................................................ 38
Section 12.13 Several Capacities .................................................................................................... 38
Section 12.14 Accounting Records and Reports of Trustee ........................................................... 38
Section 12.15 No Remedy Exclusive ............................................................................................. 38
ARTICLE XIII
MODIFICATION OF THIS TRUST AGREEMENT
Section 13.01 Limitations ............................................................................................................... 39
Section 13.02 Supplemental Agreements Not Requiring Consent of Bondholders ....................... 39
Section 13.03 Supplemental Agreement Requiring Consent of Bondholders ................................ 39
Section 13.04 Effect of Supplemental Agreements ........................................................................ 40
Section 13.05 Supplemental Agreements to be Part of this Trust Agreement ............................... 40
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.01 Parties in Interest ..................................................................................................... 41
Section 14.02 Severability .............................................................................................................. 41
Section 14.03 No Personal Liability of City Officials; Limited Liability of City to
Bondholders ............................................................................................................. 41
Section 14.04 Execution of Instruments; Proof of Ownership ....................................................... 41
Section 14.05 Governing Law; Venue ............................................................................................ 42
Section 14.06 Notices ..................................................................................................................... 42
Section 14.07 Holidays ................................................................................................................... 43
Section 14.08 Captions ................................................................................................................... 43
Section 14.09 Counterparts ............................................................................................................. 43
EXHIBIT A FORM OF BOND .................................................................................................. A-1
EXHIBIT B FORM OF REQUISITION .................................................................................... B-1
4846-5351-8811v3/200434-0005
TRUST AGREEMENT
This TRUST AGREEMENT is dated as of __________ 1, 2021, and is made by and
between the CITY OF SANTA ANA, a charter city and municipal corporation duly organized and
validly existing under and pursuant to the Constitution and the laws of the State of California and its
charter (the “City”), and U.S. BANK NATIONAL ASSOCIATION a national banking association
organized and existing under the laws of the United States of America, as trustee (the “Trustee”).
RECITALS
WHEREAS, the City is a member of the California Public Employees’ Retirement System
(“PERS”) and, as such, is obligated by the Public Employees’ Retirement Law, constituting Part 3 of
Division 5 of Title 2 of the California Government Code (the “Retirement Law”), and the contract
between the Board of Administration of PERS and the City Council of the City, effective July 1,
1948 (as amended, the “PERS Contract”), to make contributions to PERS to (a) fund pension
benefits for its employees who are members of PERS, (b) amortize the unfunded actuarial liability
with respect to such pension benefits, and (c) appropriate funds for the purposes described in (a) and
(b); and
WHEREAS, the City is authorized pursuant to Articles 10 and 11 (commencing with section
53570) of Chapter 3 of Division 2 of Title 5 of the California Government Code (the “Refunding
Law”) to issue bonds for the purpose of refunding certain obligations of the City, including the
obligations set forth in the PERS Contract; and
WHEREAS, for the purpose of refunding the City’s unamortized, unfunded accrued
actuarial liability with respect to pension benefits under the Retirement Law (the “Unfunded
Liability”), and to pay the costs of issuance, including underwriter’s discount and any original issue
discount, the City has determined to issue its $__________ City of Santa Ana Taxable Pension
Obligation Bonds, Series 2021 (the “Bonds”), all pursuant to and secured by this Trust Agreement
providing for the issuance of the Bonds, all in the manner provided herein;
NOW THEREFORE, the City and the Trustee agree as follows, each for the benefit of the
other and the benefit of holders of the Bonds (as defined below) issued in accordance with this Trust
Agreement.
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.01 Certain Defined Terms. The terms defined in this Article I shall, for all
purposes of this Trust Agreement, have the meanings specified unless the context clearly requires
otherwise.
“Account” means any account established pursuant to this Trust Agreement.
“Additional Bonds” means bonds issued in accordance with Section 2.06 hereof.
“Annual Debt Service” means, for any Bond Year, the sum of the aggregate amount of
principal required to be paid on Bonds during such Bond Year either at maturity or pursuant to a
2
4846-5351-8811v3/200434-0005
mandatory sinking fund payment and the interest due on the Bonds on each Interest Payment Date
during such Bond Year.
“Authorized City Representative” means the City Manager, the Executive Director of
Finance & Management Services, or any officer authorized to act on their respective behalves.
“Authorized Denominations” means $5,000 and any integral multiple thereof.
“Beneficial Owner” means, whenever used with respect to a Bond, the person in whose
name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of
such Participant or such person’s subrogee.
“Bond” or “Bonds” means the bonds issued under this Trust Agreement and designated as
“City of Santa Ana Taxable Pension Obligation Bonds, Series 2021.”
“Bond Counsel” means (a) Stradling Yocca Carlson & Rauth, a Professional Corporation, or
(b) a firm of attorneys nationally recognized as experts in the area of municipal finance who are
familiar with the transactions contemplated under this Trust Agreement and acceptable to the City.
“Bond Interest Account” means the Account of that name established within the Revenue
Fund pursuant to Section 6.02(a) hereof.
“Bond Principal Account” means the Account of that name established within the Revenue
Fund pursuant to Section 6.02(a) hereof.
“Bond Year” means the twelve-month period commencing on each __________ 2 and
ending on the next succeeding __________ 1, except that the first Bond Year shall commence on the
Closing Date and end on __________.
“Book-Entry Bonds” means the Bonds held by DTC (or its nominee) as the registered owner
thereof pursuant to the terms and provisions of Section 3.03 hereof.
“Business Day” means a day (a) other than a day on which banks located in the City of New
York, New York or the cities in which the respective Principal Office of the Trustee or any Paying
Agent are located, are required or authorized by law or executive order to close, and (b) on which the
New York Stock Exchange is open.
“Closing Date” means __________, 2021.
“Consultant” means the accountant, attorney, consultant, municipal finance consultant or
investment banker, or firm thereof, retained by the City to perform acts and carry out the duties
provided for such Consultant in this Trust Agreement. Such accountant, attorney, consultant,
municipal finance consultant or investment banker, or firm thereof, shall be nationally recognized
within its profession for work of the character required.
“Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate
executed and delivered by the City and acknowledged and accepted by the dissemination agent listed
therein, dated __________, 2021, as originally executed and as it may be amended from time to time
in accordance with the terms thereof.
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“Costs of Issuance” means all costs and expenses incurred by the City in connection with the
issuance of the Bonds and the refunding of the Unfunded Liability, including, but not limited to, out-
of-pocket expenses of the City, costs and expenses of printing and copying documents and the Bonds
and the fees, costs and expenses of Rating Agencies, credit providers or enhancers, the Trustee,
counsel to the Trustee, Bond Counsel, the verification agent, accountants, municipal finance
consultant, disclosure counsel and other consultants and the premium for any municipal bond
insurance and surety bond insurance.
“Defeasance Securities” means any of the following: (a) non-callable direct obligations of
the United States of America (“Treasuries”), (b) evidence of ownership of proportionate interests in
future interest and principal payments on Treasuries held by a bank or trust company as custodian,
under which the owner of the investment is the real party in interest and has the right to proceed
directly and individually against the obligor and the underlying Treasuries are not available to any
person claiming through the custodian or to whom the custodian may be obligated, and (c) pre-
refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody’s, respectively (or any
combination thereof), which shall be authorized to be used to effect defeasance of the Bonds.
“DTC” means The Depository Trust Company, a limited-purpose trust company organized
under the laws of the State of New York, and its successors and assigns.
“Event of Default” means any occurrence or event specified in Section 11.01 hereof.
“Fiduciary or Fiduciaries” means the Trustee, any Paying Agent, or any or all of them, as
may be appropriate.
“Fiscal Year” means the period of time beginning on July 1 of each given year and ending
on June 30 of the immediately subsequent year, or such other period as the City designates as its
fiscal year.
“Fund” means any fund established pursuant to this Trust Agreement.
“Holder,” or “Bondholder,” “owner” or “registered owner” means the registered owner of
any Bonds, including DTC or its nominee as the sole registered owner of Book-Entry Bonds.
“Information Services” means any one or more of the national information services that
Trustee determines are in the business of disseminating notices of redemption of obligations such as
the Bonds.
“Interest Payment Date” means __________ 1 and __________ 1 of each year commencing
__________ 1, 20__.
“Mail” means by first-class United States mail, postage prepaid.
“Moody’s” means Moody’s Investors Service, Inc., New York, New York, and its
successors, and, if such corporation shall for any reason no longer perform the functions of a
securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized
rating agency designated by the City.
“Opinion of Bond Counsel” means a written opinion of Bond Counsel.
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“Outstanding,” with respect to the Bonds, means all Bonds which have been authenticated
and delivered under this Trust Agreement, except:
(a) Bonds canceled or purchased by the Trustee for cancellation or delivered to
or acquired by the Trustee for cancellation and, in all cases, with the intent to extinguish the debt
represented thereby.
(b) Bonds deemed to be paid in accordance with Section 10.02 hereof.
(c) Bonds in lieu of which other Bonds have been authenticated under
Sections 3.02 and 3.04 hereof.
(d) Bonds that have become due (at maturity, on redemption, or otherwise) and
for the payment of which sufficient moneys, including interest accreted or accrued to the due date,
are held by the Trustee or a Paying Agent.
(e) For purposes of any consent or other action to be taken by the Holders of a
specified percentage of Bonds Outstanding under this Trust Agreement, Bonds held by or for the
account of the City or by any person controlling, controlled by or under common control with the
City, unless such Bonds are pledged to secure a debt to an unrelated party, in which case such Bonds
shall, for purposes of consents and other Bondholder action, be deemed to be Outstanding and owned
by the party to which such Bonds are pledged. Nothing herein shall be deemed to prevent the City
from purchasing Bonds from any party out of any funds available to the City.
“Participant” means the participants of DTC which include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
“Paying Agent” means any paying agent for the Bonds, or successor thereto, appointed by
the City pursuant to Sections 7.01 or 7.02 hereof, and any successor appointed pursuant to
Section 7.04 hereof.
“Permitted Investments” means the following:
(1) Direct obligations of the United States of America and securities fully and
unconditionally guaranteed as to the timely payment of principal and interest by the United States of
America (“U.S. Government Securities”).
(2) Direct obligations * of the following federal agencies which are fully
guaranteed by the full faith and credit of the United States of America:
a. Export-Import Bank of the United States – Direct obligations and
fully guaranteed certificates of beneficial interest
b. Federal Housing Administration – debentures
* The following are explicitly excluded from the securities enumerated in 2 and 3:
(i) All derivative obligations, including without limitation inverse floaters, residuals, interest-only, principal-only and
range notes;
(ii) Obligations that have a possibility of returning a zero or negative yield if held to maturity;
(iii) Obligations that do not have a fixed par value or those whose terms do not promise a fixed dollar amount at maturity or
call date; and
(iv) Collateralized Mortgage-Backed Obligations (“CMOs”).
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c. General Services Administration – participation certificates
d. Government National Mortgage Association (“GNMAs”) –
guaranteed mortgage-backed securities and guaranteed participation
certificates
e. Small Business Administration – guaranteed participation certificates
and guaranteed pool certificates
f. U.S. Department of Housing & Urban Development – local authority
bonds
g, U.S. Maritime Administration – guaranteed Title XI financings
h. Washington Metropolitan Area Transit Authority – guaranteed transit
bonds
(3) Direct obligations* of the following federal agencies which are not fully
guaranteed by the faith and credit of the United States of America:
a. Federal National Mortgage Association (“FNMAs”) – senior debt
obligations rated Aaa by Moody’s Investors Service (“Moody’s”) and
AAA by Standard & Poor’s Ratings Services (“S&P”)
b. Federal Home Loan Mortgage Corporation (“FHLMCs”) –
participation certificates and senior debt obligations rated Aaa by
Moody’s and AAA by S&P
c. Federal Home Loan Banks – consolidated debt obligations
d. Student Loan Marketing Association – debt obligations
e. Resolution Funding Corporation – debt obligations
(4) Direct, general obligations of any state of the United States of America or any
subdivision or agency thereof whose uninsured and unguaranteed general obligation debt is rated, at
the time of purchase, A2 or better by Moody’s and A or better by S&P, or any obligation fully and
unconditionally guaranteed by any state, subdivision or agency whose uninsured and unguaranteed
general obligation debt is rated, at the time of purchase, A2 or better by Moody’s and A or better by
S&P.
(5) Commercial paper (having original maturities of not more than 270 days)
rated, at the time of purchase, P-1 by Moody’s and A-1 or better by S&P.
(6) Certificates of deposit, savings accounts, deposit accounts or money market
deposits in amounts that are continuously and fully insured by the Federal Deposit Insurance
Corporation (“FDIC”), including the Bank Insurance Fund and the Savings Association Insurance
Fund, and including funds for which the Trustee or its affiliates provide investment advisory or other
management services.
(7) Certificates of deposit, deposit accounts, federal funds or bankers’
acceptances (in each case having maturities of not more than 365 days following the date of
purchase) of any domestic commercial bank or United States branch office of a foreign bank,
provided that such bank’s short-term certificates of deposit are rated P-1 by Moody’s and A-1 or
better by S&P (not considering holding company ratings).
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(8) Investments in money-market funds rated AAAm or AAAm-G by S&P,
including funds for which the Trustee and its affiliates provide investment advisory or other
management services.
(9) Repurchase agreements that meet the following criteria:
a. A master repurchase agreement or specific written repurchase
agreement, substantially similar in form and substance to the Public
Securities Association or Bond Market Association master repurchase
agreement, governs the transaction.
b. Acceptable providers shall consist of (i) registered broker/dealers
subject to Securities Investors’ Protection Corporation (“SIPC”)
jurisdiction or commercial banks insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed
rating of A3/P-1 or better by Moody’s and A-/A-1 or better by S&P,
or (ii) domestic structured investment companies rated Aaa by
Moody’s and AAA by S&P.
c. The repurchase agreement shall require termination thereof if the
counterparty’s ratings are suspended, withdrawn or fall below A3 or
P-1 from Moody’s, or A- or A-1 from S&P. Within ten (10) days, the
counterparty shall repay the principal amount plus any accrued and
unpaid interest on the investments.
d. The repurchase agreement shall limit acceptable securities to U.S.
Government Securities and to the obligations of GNMA, FNMA or
FHLMC described in 2(d), 3(a) and 3(b) above. The fair market
value of the securities in relation to the amount of the repurchase
obligation, including principal and accrued interest, is equal to a
collateral level of at least 104% for U.S. Government Securities and
105% for GNMAs, FNMAs or FHLMCs. The repurchase agreement
shall require (i) the Trustee or the Agent to value the collateral
securities no less frequently than weekly, (ii) the delivery of
additional securities if the fair market value of the securities is below
the required level on any valuation date, and (iii) liquidation of the
repurchase securities if any deficiency in the required percentage is
not restored within two (2) business days of such valuation.
e. The repurchase securities shall be delivered free and clear of any lien
to the Trustee or to an independent third party acting solely as agent
(“Agent”) for the Trustee, and such Agent is (i) a Federal Reserve
Bank, or (ii) a bank which is a member of the FDIC and which has
combined capital, surplus and undivided profits or, if appropriate, a
net worth, of not less than $50 million, and the Trustee shall have
received written confirmation from such third party that such third
party holds such securities, free and clear of any lien, as agent for the
Trustee.
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f. A perfected first security interest in the repurchase securities shall be
created for the benefit of the Trustee, and the issuer and the Trustee
shall receive an opinion of counsel as to the perfection of the security
interest in such repurchase securities and any proceeds thereof.
g. The repurchase agreement shall have a term of one year or less, or
shall be due on demand.
h. The repurchase agreement shall establish the following as events of
default, the occurrence of any of which shall require the immediate
liquidation of the repurchase securities:
(i) insolvency of the broker/dealer or commercial bank
serving as the counterparty under the repurchase
agreement;
(ii) failure by the counterparty to remedy any deficiency
in the required collateral level or to satisfy the margin
maintenance call under item 9(d) above; or
(iii) failure by the counterparty to repurchase the
repurchase securities on the specified date for
repurchase.
(10) Investment agreements, collateralized at 102%, (also referred to as guaranteed
investment contracts) that meet the following criteria:
a. A master agreement or specific investment agreement governs the
transaction.
b. Acceptable providers of uncollateralized investment agreements shall
consist of (i) domestic FDIC-insured commercial banks, or U.S.
branches of foreign banks, rated at least Aa2 by Moody’s and AA by
S&P; (ii) domestic insurance companies rated Aaa by Moody’s and
AAA by S&P; and (iii) domestic structured investment companies
rated Aaa by Moody’s and AAA by S&P.
c. Acceptable providers of collateralized investment agreements shall
consist of (i) registered broker/dealers subject to SIPC jurisdiction, if
such broker/dealer has an uninsured, unsecured and unguaranteed
rating of Al or better by Moody’s and A+ or better by S&P;
(ii) domestic FDIC-insured commercial banks, or U.S. branches of
foreign banks, rated at least A1 by Moody’s and A+ by S&P; (iii)
domestic insurance companies rated at least A1 by Moody’s and A+
by S&P; and (iv) domestic structured investment companies rated
Aaa by Moody’s and AAA by S&P. Required collateral levels shall
be as set forth in 10(f) below.
d. The investment agreement shall provide that if the provider’s ratings
fall below Aa3 by Moody’s or AA- by S&P, the provider shall within
ten (10) days either (i) repay the principal amount plus any accrued
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and interest on the investment; or (ii) deliver Permitted Collateral as
provided below.
e. The investment agreement must provide for termination thereof if the
provider’s ratings are suspended, withdrawn or fall below A3 from
Moody’s or A- from S&P. Within ten (10) days, the provider shall
repay the principal amount plus any accrued interest on the
agreement, without penalty to the City.
f. The investment agreement shall provide for the delivery of collateral
described in (i) or (ii) below (“Permitted Collateral”) which shall be
maintained at the following collateralization levels at each valuation
date:
(i) U.S. Government Securities at 104% of principal plus accrued
interest; or
(ii) Obligations of GNMA, FNMA or FHLMC (described in 2(d),
3(a) and 3(b) above) at 105% of principal and accrued
interest.
g. The investment agreement shall require the Trustee to determine the
market value of the Permitted Collateral not less than weekly and
notify the investment agreement provider on the valuation day of any
deficiency. Permitted Collateral may be released by the Trustee to the
provider only to the extent that there are excess amounts over the
required levels. Market value, with respect to collateral, may be
determined by any of the following methods:
(i) the last quoted “bid” price as shown in Bloomberg, Interactive
Data Systems, Inc., The Wall Street Journal or Reuters;
(ii) valuation as performed by a nationally recognized pricing
service, whereby the valuation method is based on a
composite average of various bid prices; or
(iii) the lower of two bid prices by nationally recognized dealers.
Such dealers or their parent holding companies shall be rated
investment grade and shall be market makers in the securities
being valued.
h. Securities held as Permitted Collateral shall be free and clear of all
liens and claims of third parties, held in a separate custodial account
and registered in the name of the Trustee or the Agent.
i. The provider shall grant the Trustee a perfected first security interest
in any collateral delivered under an investment agreement. For
investment agreements collateralized initially and in connection with
the delivery of Permitted Collateral under 10(f) above, the Trustee
shall receive an opinion of counsel as to the perfection of the security
interest in the collateral.
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j. The investment agreement shall provide that moneys invested under
the agreement must be payable and putable at par to the Trustee
without condition, breakage fee or other penalty, upon not more than
two (2) business days’ notice, or immediately on demand for any
reason for which the funds invested may be withdrawn from the
applicable fund or account established under the authorizing
document, as well as the following:
(i) In the event of a deficiency in the debt service
account;
(ii) Upon acceleration after an event of default;
(iii) Upon refunding of the Bonds in whole or in part;
(iv) Reduction of any debt service reserve requirement for
the Bonds; or
(v) If a determination is later made by a nationally
recognized bond counsel that investments must be
yield-restricted.
Notwithstanding the foregoing, the agreement may provide for a
breakage fee or other penalty that is payable in arrears and not as a
condition of a draw by the Trustee if the City’s obligation to pay such
fee or penalty is subordinate to its obligation to pay debt service on
the Bonds and to make deposits to any debt service reserve fund
established for the Bonds.
(k) The investment agreement shall establish the following as events of
default, the occurrence of any of which shall require the immediate
liquidation of the investment securities:
(i) Failure of the provider or the guarantor (if any) to
make a payment when due or to deliver Permitted
Collateral of the character, at the times or in the
amounts described above;
(ii) Insolvency of the provider or the guarantor (if any)
under the investment agreement;
(iii) Failure by the provider to remedy any deficiency with
respect to required Permitted Collateral;
(iv) Failure by the provider to make a payment or observe
any covenant under the agreement;
(v) The guaranty (if any) is terminated, repudiated or
challenged; or
(vi) Any representation of warranty furnished to the
Trustee or the issuer in connection with the agreement
is false or misleading.
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(l) The investment agreement must incorporate the following general
criteria:
(i) “Cure periods” for payment default shall not exceed
two (2) business days;
(ii) The agreement shall provide that the provider shall
remain liable for any deficiency after application of
the proceeds of the sale of any collateral, including
costs and expenses incurred by the Trustee;
(iii) Neither the agreement nor guaranty agreement, if
applicable, may be assigned (except to a provider that
would otherwise be acceptable under these
guidelines);
(iv) If the investment agreement is for a debt service
reserve fund, reinvestments of funds shall be required
to bear interest at a rate at least equal to the original
contract rate.
(v) The provider shall be required to immediately notify
the Trustee of any event of default or any suspension,
withdrawal or downgrade of the provider’s ratings;
and
(vi) The agreement shall be unconditional and shall
expressly disclaim any right of set-off or
counterclaim.
(11) Forward delivery agreements in which the securities delivered mature on or
before each interest payment date (for debt service or debt service reserve funds) or draw down date
(construction funds) that meet the following criteria:
(a) A specific written investment agreement governs the transaction.
(b) Acceptable providers shall be limited to (i) any registered
broker/dealer subject to the Securities Investors’ Protection
Corporation jurisdiction, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed obligation rated A3/P-1 or
better by Moody’s and A-/A-1 or better by S&P; (ii) any commercial
bank insured by the FDIC, if such bank has an uninsured, unsecured
and unguaranteed obligation rated A3/P-1 or better by Moody’s and
A-/A-1 or better by S&P; and (iii) domestic structured investment
companies rated Aaa by Moody’s and AAA by S&P.
(c) The forward delivery agreement shall provide for termination or
assignment (to a qualified provider hereunder) of the agreement if the
provider’s ratings are suspended, withdrawn or fall below A3 or P-1
from Moody’s or A- or A-1 from S&P. Within ten (10) days, the
provider shall fulfill any obligations it may have with respect to
shortfalls in market value. There shall be no breakage fee payable to
the provider in such event.
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(d) Permitted securities shall include the investments listed in 1, 2 and 3
above.
(e) The forward delivery agreement shall include the following
provisions:
(i) The permitted securities must mature at least one (1) business
day before a debt service payment date or scheduled draw.
The maturity amount of the permitted securities must equal or
exceed the amount required to be in the applicable fund on the
applicable valuation date.
(ii) The agreement shall include market standard termination
provisions, including the right to terminate for the provider’s
failure to deliver qualifying securities or otherwise to perform
under the agreement. There shall be no breakage fee or
penalty payable to the provider in such event.
(iii) Any breakage fees shall be payable only on debt service
payment dates and shall be subordinated to the payment of
debt service and debt service reserve fund replenishments.
(iv) The provider must submit at closing a bankruptcy opinion to
the effect that upon any bankruptcy, insolvency or
receivership of the provider, the securities will not be
considered to be a part of the provider’s estate.
(v) The agreement may not be assigned (except to a provider that
would otherwise be acceptable under these guidelines).
(12) Forward delivery agreements in which the securities delivered mature after
the funds may be required but provide for the right of the City or the Trustee to put the securities
back to the provider under a put, guaranty or other hedging arrangement.
(13) Any other investment which the City is permitted by law to make, including
without limitation investment in the Local Agency Investment Fund of the State of California
(LAIF), provided that any investment of the type authorized pursuant to paragraphs (d), (f), (h) and
(i) of section 53601 of the California Government Code are additionally restricted as provided in the
appropriate paragraph or paragraphs above applicable to such type of investment and provided
further that investments authorized pursuant to paragraphs (k) and (m) of section 53601 are not
permitted.
Maturity of investments shall be governed by the following:
a. Investments of monies (other than reserve funds) shall be in securities and
obligations maturing not later than the dates on which such monies will be
needed to make payments.
b. Investments shall be considered as maturing on the first date on which they
are redeemable without penalty at the option of the holder or the date on
which the Trustee may require their repurchase pursuant to repurchase
agreements.
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c. Investments of monies in reserve funds not payable upon demand shall be
restricted to maturities of five years or less.
To the extent that any of the requirements concerning Permitted Investments embodies a
legal conclusion, the Trustee shall be entitled to conclusively rely upon a certificate from the
appropriate party or an opinion from counsel to such party, that such requirement has been met.
“PERS” means the California Public Employees’ Retirement System.
“PERS Contract” has the meaning assigned that term in the Recitals to this Trust
Agreement.
“Principal Office of the Trustee” means the office of the Trustee at the address set forth in
Section 14.06 of this Trust Agreement, provided for transfer, exchange, registration, surrender and
payment of Bonds means care of the corporate trust operations office of U.S. Bank National
Association in St. Paul, Minnesota or such other office designated by the Trustee.
“Rating Agencies” means Moody's and S&P.
“Rating Category” means (a) with respect to any long-term rating category, all ratings
designated by a particular letter or combination of letters, without regard to any numerical modifier,
plus or minus sign or other modifier and (b) with respect to any short-term or commercial paper
rating category, all ratings designated by a particular letter or combination of letters and taking into
account any numerical modifier, but not any plus or minus sign or other modifier.
“Record Date” means the fifteenth day of each calendar month preceding any Interest
Payment Date, regardless of whether such day is a Business Day.
“Redemption Fund” means the Fund of that name established pursuant to Section 6.03
hereof.
“Refunding Law” has the meaning assigned that term in the Recitals to this Trust
Agreement.
“Registrar” means, for purposes of this Trust Agreement, the Trustee or its successor or
assignee.
“Representation Letter” means the Letter of Representations from the City and the Trustee
to DTC with respect to the Bonds.
“Requisition” or “Written Requisition” means a Requisition or Written Requisition,
substantially in the form of Exhibit B hereto.
“Responsible Officer” means an officer of the Trustee assigned by the Trustee to administer
this Trust Agreement.
“Retirement Law” has the meaning assigned that term in the Recitals to this Trust
Agreement.
“Revenue Fund” means the Fund of that name established pursuant to Section 6.02 hereof.
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“S&P” means S&P Global Ratings, LLC, a Standard & Poor’s Financial Services LLC
business, and its successors, and, if such company shall for any reason no longer perform the
functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally
recognized rating agency designated by the City.
“Securities Depositories” means any of The Depository Trust Company or, in accordance
with then-current guidelines of the Securities and Exchange Commission, such other securities
depositories, or if no such depositories, as the City may indicate in a certificate of the City delivered
to the Trustee.
“State” means the State of California.
“Total Bond Obligation” means, as of any date of calculation, the aggregate principal
amount of the Bonds then Outstanding.
“Trust Agreement” means this Trust Agreement dated as of __________ 1, 2021 between
the City and the Trustee, as it may be amended, supplemented or otherwise modified from time to
time.
“Trustee” means the entity named as such in the heading of this Trust Agreement until a
successor replaces it, and thereafter means such successor.
“Unfunded Liability” has the meaning assigned that term in the Recitals to this Trust
Agreement.
Section 1.02 Other Definitional Provisions. Except as otherwise indicated, references to
Articles and Sections are to the Articles and Sections of this Trust Agreement. Any of the terms
defined in Section 1.01 may, unless the context otherwise requires, be used in the singular or the
plural, depending on the reference.
ARTICLE II
THE BONDS
Section 2.01 Issuance of Bonds; Form; Dating. Bonds may be issued by the City under
the terms of this Trust Agreement only to refund the City’s Unfunded Liability under the PERS
Contract and the Retirement Law and to pay the Costs of Issuance in connection with the issuance of
the Bonds. The Bonds shall be designated “City of Santa Ana Taxable Pension Obligation Bonds,
Series 2021” and shall be issued in Authorized Denominations. The Bonds shall be issued hereunder
in the aggregate principal amount of $__________. Interest on the Bonds shall be payable on each
__________ 1 and __________ 1, commencing __________ 1, 20__.
Section 2.02 Description of the Bonds. Each Bond shall be issued in fully registered
form and shall be numbered as determined by the Trustee. The Bonds shall be dated the Closing
Date. The Bonds shall be issued in Authorized Denominations; provided, however, that the Bonds
shall initially be Book-Entry Bonds.
The Bonds shall mature on the dates, in the principal amounts, and interest thereon shall be
computed at the rates, as shown below:
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Maturity Date
(__________ 1) Principal Amount Interest Rate
$ %
Section 2.03 Interest on the Bonds. Interest on each Bond of each maturity shall be
payable at the respective per annum rates set forth in Section 2.02 hereof and shall be payable on
each Interest Payment Date until maturity or earlier redemption, computed using a year of 360 days
comprised of twelve 30-day months. Interest on each Bond shall accrue from the Interest Payment
Date for the Bonds next preceding the date of authentication and delivery thereof, unless (i) such date
of authentication is an Interest Payment Date in which event interest shall be payable from such date
of authentication; (ii) it is authenticated after a Record Date and before the close of business on the
immediately following Interest Payment Date, in which event interest thereon shall be payable from
such Interest Payment Date; or (iii) it is authenticated prior to the close of business on the first
Record Date, in which event interest thereon shall be payable from the Closing Date; provided,
however, that if at the time of authentication of any Bond interest thereon is in default, interest
thereon shall be payable from the Interest Payment Date to which interest has previously been paid or
made available for payment or, if no interest has been paid or made available for payment, from the
Closing Date.
Section 2.04 Medium of Payment. Principal, premium, if any, and interest on the Bonds
shall be payable in currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts. Payments of interest on any of the Bonds will be
made on each Interest Payment Date by check of the Trustee sent by Mail, or by wire transfer to any
Holder of $1,000,000 or more of Bonds, to the account specified by such Holder in a written request
delivered to the Trustee on or prior to the Record Date for such Interest Payment Date, to the Holder
thereof on the Record Date; provided, however, that payments of defaulted interest shall be payable
to the person in whose name such Bond is registered at the close of business on a special record date
fixed therefor by the Trustee which shall not be more than 15 days and not less than ten days prior to
the date of the proposed payment of defaulted interest. Payment of the principal of the Bonds upon
redemption or maturity will be made upon presentation and surrender of each such Bond, at the
Principal Office of the Trustee.
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Section 2.05 Form. The Bonds shall be substantially in the form set forth in Exhibit A
attached hereto and by this reference incorporated herein. The Bonds may be printed, lithographed,
photocopied or typewritten and shall be in such Authorized Denominations as may be determined by
the City.
Section 2.06 Additional Bonds. From time to time, the City may enter into (i) one or
more other trust agreements or indentures and/or (ii) one or more agreements supplementing and/or
amending this Trust Agreement, for the purpose of providing for the issuance of Additional Bonds to
refund the Bonds or to refund all or any portion of any Unfunded Liability under the PERS Contract
arising subsequent to the issuance of the Bonds or any other obligations due to PERS. Such
Additional Bonds may be issued on a parity with the Bonds.
ARTICLE III
EXECUTION, AUTHENTICATION AND EXCHANGE OF BONDS;
BOOK ENTRY BONDS
Section 3.01 Execution and Authentication; Registration.
(a) The Bonds will be signed for the City with the manual or facsimile signature
of the Mayor of the City Council of the City. The City may deliver to the Trustee or its agent duly
executed Bonds for authentication from time to time by the Trustee or its agent as such Bonds may
be required. Bonds executed and so delivered and authenticated will be valid. In case any officer of
the City whose signature or whose facsimile signature shall appear on any Bonds shall cease to be
such officer before the authentication of such Bonds, such signature or the facsimile signature thereof
shall nevertheless be valid and sufficient for all purposes the same as if he or she had remained in
office until authentication. Also, if a person signing a Bond is the proper officer on the actual date of
execution, the Bond will be valid even if that person is not the proper officer on the nominal date of
action and even though, at the date of this Trust Agreement, such person was not such officer.
(b) A Bond will not be valid until the Trustee or its agent executes the certificate
of authentication on such Bond by manual signature. Such signature will be conclusive evidence that
such Bond has been authenticated under this Trust Agreement. The Trustee may appoint an
authenticating agent acceptable to the City to authenticate Bonds. An authenticating agent may
authenticate Bonds whenever the Trustee may do so. Each reference in this Trust Agreement to
authentication by the Trustee includes authentication by such agent.
(c) Bonds may be presented at the Principal Office of the Trustee, unless a
different office has been designated for such purpose, for registration, transfer and exchange. The
Registrar will keep a register of such Bonds and of their transfer and exchange.
Section 3.02 Transfer or Exchange of Bonds. Subject to Section 3.03:
(a) All Bonds shall be issued in fully registered form. Upon surrender for
transfer of any Bond at the Principal Office of the Trustee, the Trustee shall deliver in the name of
the transferee or transferees a new fully authenticated and registered Bond or Bonds of Authorized
Denominations of the same maturity for the aggregate principal amount which the Bondholder is
entitled to receive.
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(b) All Bonds presented for transfer, redemption or payment shall be
accompanied by a written instrument or instruments of transfer or authorization for exchange, in
form and with guaranty of signature satisfactory to the City, duly executed by the Bondholder or by
his or her duly authorized attorney. The Trustee also may require payment from the Bondholder of a
sum sufficient to cover any tax, or other governmental fee or charge that may be imposed in relation
thereto. Such taxes, fees and charges shall be paid before any such new Bond shall be delivered.
(c) Bonds delivered upon any transfer as provided herein, or as provided in
Section 3.04, shall be valid obligations of the City, evidencing the same debt as the Bond
surrendered, shall be secured by this Trust Agreement and shall be entitled to all of the security and
benefits hereof to the same extent as the Bond surrendered.
(d) The City, the Trustee and the Paying Agent shall treat the Bondholder, as
shown on the registration books kept by the Trustee, as the person exclusively entitled to payment of
principal, premium, if any, and interest with respect to such Bond and to the exercise of all other
rights and powers of the Bondholder, except that all interest payments will be made to the party who,
as of the Record Date, is the Bondholder.
(e) The Trustee shall not be required to register the transfer or exchange of any
Bond during the period in which the Trustee is selecting Bonds for redemption and any bond that has
been selected for redemption.
Section 3.03 Book-Entry Bonds.
(a) Except as provided in paragraph (c) of this Section 3.03, the registered owner
of all of the Bonds shall be DTC and the Bonds shall be registered in the name of Cede & Co., as
nominee for DTC. Except as provided in paragraph (d) of this Section 3.03, payment of principal,
interest and premium, if any, for any Bonds registered in the name of Cede & Co. shall be made as
provided in the Representation Letter.
(b) The Bonds shall be initially issued in the form of a separate single
authenticated fully registered Bond for each separate stated maturity of the Bonds. The Trustee, the
Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds
registered in its name for the purposes of payment of the principal or redemption price of, or interest
on, the Bonds, selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or
required to be given to Bondholders under this Trust Agreement, registering the transfer of Bonds,
obtaining any consent or other action to be taken by Bondholders and for all other purposes
whatsoever, and neither the Trustee, the Registrar nor the City shall be affected by any notice to the
contrary. Neither the Trustee, the Registrar nor the City shall have any responsibility or obligation to
any Participant, any person claiming a beneficial ownership interest in the Bonds under or through
DTC or any Participant or any other person which is not shown on the registration books as being a
Bondholder, with respect to (i) the accuracy of any records maintained by DTC or any Participant,
(ii) the payment by DTC or any Participant of any amount in respect of the principal or redemption
price of or interest on the Bonds, (iii) any notice which is permitted or required to be given to
Bondholders under this Trust Agreement, (iv) the selection by DTC or any Participant of any person
to receive payment in the event of a partial redemption of the Bonds, or (v) any consent given or
other action taken by DTC as a Bondholder. The Trustee shall pay, from funds held under the terms
of this Trust Agreement or otherwise provided by the City, all principal or redemption price of and
interest on the Bonds only to DTC as provided in the Representation Letter and all such payments
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shall be valid and effective to satisfy and discharge fully the City’s obligations with respect to the
principal or redemption price of and interest on the Bonds to the extent of the sum or sums so paid.
No person other than DTC shall receive authenticated Bonds evidencing the obligation of the City, to
make payments of principal or redemption price and interest pursuant to this Trust Agreement. Upon
delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a
new nominee in place of Cede & Co., and subject to the provisions herein with respect to Record
Dates, the name “Cede & Co.” in this Trust Agreement shall refer to such new nominee of DTC.
(c) In the event the City determines that it is in the best interest of the Beneficial
Owners that they be able to obtain Bond certificates and notifies DTC, the Trustee and the Registrar
of such determination, then DTC will notify the Participants of the availability through DTC of Bond
certificates. In such event, the Trustee shall authenticate and the Registrar shall transfer and
exchange Bonds certificates as requested by DTC and any other Bondholders in appropriate amounts.
DTC may determine to discontinue providing its services with respect to the Bonds at any time by
giving notice to the City and the Trustee and discharging its responsibilities with respect thereto
under applicable law. Under such circumstances (if there is no successor securities depository), the
City and the Trustee shall be obligated to deliver Bond certificates as described in this Trust
Agreement. In the event Bond certificates are issued, the provisions of this Trust Agreement shall
apply to, among other things, the transfer and exchange of such certificates and the method of
payment of principal of and interest on such certificates. Whenever DTC requests the City and the
Trustee to do so, the Trustee and the City will cooperate with DTC in taking appropriate action after
reasonable notice (i) to make available one or more separate certificates evidencing the Bonds to any
Participant having Bonds credited to its DTC account or (ii) to arrange for another securities
depository to maintain custody of certificates evidencing the Bonds.
(d) Notwithstanding any other provision of this Trust Agreement to the contrary,
so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to the principal or redemption price of and interest on such Bonds and all notices with respect
to such Bonds shall be made and given, respectively, to DTC as provided in the Representation
Letter.
(e) In connection with any notice or other communication to be provided to
Bondholders pursuant to this Trust Agreement by the City or the Trustee with respect to any consent
or other action to be taken by Bondholders, the City or the Trustee, as the case may be, shall establish
a record date for such consent or other action and give DTC notice of such record date not less than
15 calendar days in advance of such record date to the extent possible. Notice to DTC shall be given
only when DTC is the sole Bondholder.
(f) If the City purchases, or causes the Trustee to purchase, any of the Bonds,
such purchase of Bonds shall be deemed to have occurred upon the purchase of beneficial ownership
interests in the Bonds from a Participant. Upon receipt by DTC of notice from the City and a
Participant that a purchase of beneficial ownership interests in the Bonds has been made by the City
from such Participant, DTC shall surrender to the Trustee the Bonds referenced in such notice and, if
the principal amount referenced in said notice is less than the principal amount of the Bonds so
surrendered, the Trustee shall authenticate and deliver to DTC, in exchange for the Bonds so
surrendered, a new Bond or Bonds, as the case may be, in Authorized Denominations and in a
principal amount equal to the difference between (i) the principal amount of the Bonds so
surrendered and (ii) the principal amount referenced in said notice.
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(g) Notwithstanding any provision herein to the contrary, the City and the
Trustee may agree to allow DTC, or its nominee, Cede & Co., to make a notation on any Bond
redeemed in part to reflect, for informational purposes only, the principal amount and date of any
such redemption.
(h) In the event that DTC notifies the City that it is discontinuing the book-entry
system for the Bonds, the City may either appoint another entity to hold the Bonds in book-entry
form or deliver Bond certificates to the beneficial owners or Participants, as directed by DTC.
Section 3.04 Mutilated, Lost, Stolen or Destroyed Bonds.
(a) In the event any Bond is mutilated or defaced but identifiable by number and
description, the City shall execute and the Trustee shall authenticate and deliver a new Bond of like
date, maturity and denomination as such Bond, upon surrender thereof to the Trustee; provided that
there shall first be furnished to the City and the Trustee proof satisfactory to the Trustee that the
Bond is mutilated or defaced. The Bondholder shall accompany the above with a deposit of money
required by the City for the cost of preparing the substitute Bond and all other expenses connected
with the issuance of such substitute. The City shall then cause proper record to be made of the
cancellation of the original, and thereafter the substitute shall have the validity of the original.
(b) In the event any Bond is lost, stolen or destroyed, the City may execute and
the Trustee may authenticate and deliver a new Bond of like date, maturity and denomination as that
Bond lost, stolen or destroyed; provided that there shall first be furnished to the Trustee evidence of
such loss, theft or destruction satisfactory to the Trustee, together with indemnity satisfactory to it.
(c) The City and the Trustee shall charge the Holder of such Bond all transfer
taxes, if any, and their reasonable fees and expenses in this connection. All substitute Bonds issued
and authenticated pursuant to this Section shall be issued as a substitute and numbered, if numbering
is provided for by the Trustee, as determined by the Trustee. In the event any such Bond has matured
or has been called for redemption, instead of issuing a substitute Bond, the Trustee may pay the same
without surrender thereof upon receipt of indemnity satisfactory to the Trustee.
Section 3.05 Destruction of Bonds. Whenever any Outstanding Bonds shall be delivered
to the Trustee for cancellation pursuant to this Trust Agreement, upon payment of the principal
amount and interest represented thereby or for replacement pursuant to Section 3.04 or transfer
pursuant to Section 3.02, such Bond shall be canceled and destroyed by the Trustee and counterparts
of a certificate of destruction evidencing such destruction shall, upon the City’s request, be furnished
by the Trustee to the City.
Section 3.06 Temporary Bonds.
(a) Pending preparation of definitive Bonds, the City may execute and the
Trustee shall authenticate and deliver, in lieu of definitive Bonds and subject to the same limitation
and conditions, interim receipts, certificates or temporary bonds which shall be exchanged for the
Bonds.
(b) If temporary Bonds shall be issued, the City shall cause the definitive Bonds
to be prepared and to be executed and delivered to the Trustee, and the Trustee, upon presentation to
it of any temporary Bond, shall cancel the same and deliver in exchange therefor at the place
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designated by the Bondholder, without charge to the Bondholder thereof, definitive Bonds of an
equal aggregate principal amount, of the same series, maturity and bearing interest at the same rate or
rates as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all
respects be entitled to the same benefit and security of this Trust Agreement as the definitive Bonds
to be issued and authenticated hereunder.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01 Notices to Trustee; Notices to Bondholders; Notices to DTC.
(a) Notice of redemption shall be given by the Trustee, not less than 30 nor more
than 60 days prior to the redemption date: (i) in the case of Bonds not registered in the name of a
Securities Depository or its nominee, to the respective Holders of the Bonds designated for
redemption at their addresses appearing on the registration books of the Trustee; (ii) in the case of
Bonds registered in the name of a Securities Depository or its nominee, to such Securities Depository
for such Bonds; and (iii) to the Information Services. Notice of redemption to the Holders pursuant
to (i) above shall be given by mail at their addresses appearing on the registration books of the
Trustee, or any other method agreed upon by such Holder and the Trustee. Notice of redemption to
the Securities Depositories pursuant to (ii) above and the Information Services pursuant to (iii) above
shall be given by electronically secure means, or any other method agreed upon by such entities and
the Trustee.
(b) Each notice of redemption shall state the Bonds or designated portions thereof
to be redeemed, the date of redemption, the place of redemption, the redemption price, the CUSIP
number (if any) of the Bonds to be redeemed, the distinctive numbers of the Bonds of such maturity
to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the
principal amount thereof to be redeemed, the original issue date, interest rate and stated maturity date
of each Bond to be redeemed in whole or part. Each such notice shall also state that on said date
there will become due and payable on each of the Bonds to be redeemed the redemption price, and
redemption premium, if any, thereof, and that from and after such redemption date interest thereon
shall cease to accrue.
(c) Failure to give the notices described in this Section 4.01 or any defect therein
shall not in any manner affect the redemption of any Bonds. Any notice sent as provided herein will
be conclusively presumed to have been given whether or not actually received by the addressee.
(d) The City shall have the right to rescind any notice of optional redemption
previously sent pursuant to this Section 4.01. Any such notice of rescission shall be sent in the same
manner as the notice of redemption. Neither the City nor the Trustee shall incur any liability, to
Bond Owners, DTC, or otherwise, as a result of a rescission of a notice of redemption.
Section 4.02 Optional Redemption of Bonds. The Bonds maturing on or after
__________ 1, 20__ may be redeemed at the option of the City from any source of funds on any date
on or after __________ 1, 20__ in whole or in part from such maturities as are selected by the City
within a maturity at a redemption price equal to the principal amount to be redeemed, together with
accrued interest to the date of redemption, without premium.
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Section 4.03 Mandatory Sinking Fund Redemption of Bonds. The Bonds maturing
__________ 1, 20__ (the “Term Bonds”) are subject to mandatory sinking fund redemption at a
redemption price equal to the principal amount thereof, plus accrued interest to the redemption date,
without premium. The Term Bonds shall be so redeemed on the following dates and in the following
amounts:
Redemption Date
(__________ 1)
Principal
Amount
*
* Final maturity.
On or before each March 15 next preceding any mandatory sinking fund redemption date, the
Trustee shall proceed to select for redemption pro-rata from all Term Bonds subject to mandatory
sinking fund redemption at that time, an aggregate principal amount of such Term Bonds equal to the
amount for such year as set forth in the table above and shall call such Term Bonds or portions
thereof for redemption and give notice of such redemption in accordance with the terms of
Section 4.01. At the option of the City, to be exercised by delivery of a written certificate to the
Trustee on or before June 1 next preceding any mandatory sinking fund redemption date, it may
(a) deliver to the Trustee for cancellation Term Bonds or portions thereof (in the amount of an
Authorized Denomination) of the stated maturity subject to such redemption or (b) specify a
principal amount of such Term Bonds or portions thereof (in the amount of an Authorized
Denomination) which prior to said date have been purchased or redeemed (otherwise than under the
provisions of this Section 4.03) and canceled by the Trustee at the request of the City and not
theretofore applied as a credit against any mandatory sinking fund redemption requirement. Each
such Term Bonds or portion thereof so delivered or previously redeemed shall be credited by the
Trustee at 100% of the principal amount of the Term Bonds so delivered to the Trustee by the City
against the obligation of the City on such mandatory sinking fund redemption date.
Section 4.04 [Make-Whole Redemption of Bonds. The Bonds are subject to redemption
prior to _____ 1, 20___, at the option of the City, in whole or in part (and if in part in any order of
maturity selected by the City and within a maturity bearing interest at the same rate on a pro-rata
basis as described below), on any date at a redemption price equal to the greater of:
(a) 100% of the principal amount of the Bonds to be redeemed; or
(b) the sum of the present value of the remaining scheduled payments of
principal and interest to the maturity date of such Bonds to be redeemed, not including any portion of
those payments of interest accrued and unpaid as of the date on which such Bonds are to be
redeemed, discounted to the date on which such Bonds are to be redeemed on a semi-annual basis,
assuming a 360-day year consisting of twelve 30-day months, at the Comparable Treasury Yield
(defined below) plus 25 basis points,
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plus, in each case, accrued interest on such Bonds to be redeemed to the redemption date.
For purposes of the foregoing, the following terms have the following meanings:
“Calculation Agent” means a commercial bank or an investment banking institution of
national standing that is a primary dealer of United States government securities in the United States
and designated by the City (which may be one of the institutions that served as an underwriter for the
Bonds).
“Comparable Treasury Issue” means the United States Treasury security selected by the
Calculation Agent as having a maturity comparable to the remaining term to maturity of the Bonds
being redeemed that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to the
remaining term to maturity of the Bonds being redeemed.
“Comparable Treasury Price” means, with respect to any date on which a Bond or portion
thereof is being redeemed, either (a) the average of five Reference Treasury Dealer quotations for the
date fixed for redemption, after excluding the highest and lowest such quotations, and (b) if the
Calculation Agent is unable to obtain five such quotations, the average of the quotations that are
obtained. The quotations will be the average, as determined by the Calculation Agent, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of principal
amount) quoted in writing to the Calculation Agent, at 5:00 p.m. New York City time on a date
selected by the Calculation Agent which is not less than three business days and not more than 20
business days preceding the date fixed for redemption.
“Comparable Treasury Yield” means the yield that represents the weekly average yield to
maturity for the preceding week appearing in the most recently published statistical release
designated “H.15(519) Selected Interest Rates” under the heading “Treasury Constant Maturities,” or
any successor publication selected by the Calculation Agent that is published weekly by the Board of
Governors of the Federal Reserve System and that establishes yields on actively traded United States
Treasury securities adjusted to constant maturity, for the maturity corresponding to the remaining
term to maturity of the Bonds being redeemed. The Comparable Treasury Yield will be determined
no sooner than the third business day nor earlier than the twentieth calendar day preceding the
applicable date fixed for redemption. If the H.15(519) statistical release sets forth a weekly average
yield for United States Treasury securities that have a constant maturity that is the same as the
remaining term to maturity of the Bonds being redeemed, then the Comparable Treasury Yield will
be equal to such weekly average yield. In all other cases, the Comparable Treasury Yield will be
calculated by interpolation on a straight-line basis between the weekly average yields on the United
States Treasury securities that have a constant maturity (i) closest to and greater than the remaining
term to maturity of the Bonds being redeemed; and (ii) closest to and less than the remaining term to
maturity of the Bonds being redeemed. Any weekly average yields calculated by interpolation will
be rounded to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded
upward. If, and only if, weekly average yields for United States Treasury securities for the preceding
week are not available in the H.15(519) statistical release or any successor publication, then the
Comparable Treasury Yield will be the rate of interest per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price (each as defined herein) as of the date fixed for
redemption.
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“Reference Treasury Dealer” means a primary dealer of United States Government securities
in the United States (which may be one of the institutions that served as an underwriter for the
Bonds) appointed by the District and reasonably acceptable to the Calculation Agent.]
Section 4.05 Payment of Bonds Called for Redemption; Effect of Redemption Call.
(a) Upon surrender to the Trustee or the Trustee’s agent, Bonds called for
redemption shall be paid at the redemption price stated in the notice, plus interest accrued to the
redemption date.
(b) On the date so designated for redemption, notice having been given in the
manner and under the conditions provided herein relating to such Bonds as are to be redeemed and
moneys for payment of the redemption price being held in trust to pay the redemption price, the
Bonds so called for redemption shall become and be due and payable on the redemption date, interest
on such Bonds shall cease to accrue, such Bonds shall cease to be entitled to any lien, benefit or
security under this Trust Agreement and the owners of such Bonds shall have no rights in respect
thereof except to receive payment of the redemption price and accrued interest to the redemption
date.
(c) Bonds which have been duly called for redemption under the provisions of
this Article IV and for the payment of the redemption price of which moneys shall be deposited in
the Redemption Fund or otherwise held in trust for the Holders of the Bonds to be redeemed, all as
provided in this Trust Agreement, shall not be deemed to be Outstanding under the provisions of this
Trust Agreement.
Section 4.06 Selection of Bonds for Redemption; Bonds Redeemed in Part. If less than
all of the Bonds are called for redemption, the City will designate the maturities from which the
Bonds are to be redeemed. For so long as the Bonds are registered in book entry form and DTC or a
successor securities depository is the sole registered owner of such Bonds, if fewer than all of such
Bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular
Bonds to be redeemed shall be selected on a pro rata pass-through distribution of principal basis in
accordance with the operational arrangements of DTC then in effect, and if the DTC operational
arrangements do not allow for redemption on a pro rata pass-through distribution of principal basis,
all Bonds to be so redeemed will be selected for redemption in accordance with DTC procedures by
lot; provided further that any such redemption must be performed such that all Bonds remaining
outstanding will be in authorized denominations.
In connection with any repayment of principal of the Bonds pursuant to the pass-through
distribution of principal as described above, the Paying Agent will direct DTC to make a pass-
through distribution of principal to the owners of the Bonds. A form of Pro Rata Pass-Through
Distribution of Principal Notice will be provided to the Trustee that includes a table of factors
reflecting the relevant scheduled redemption payments and DTC’s applicable procedures, which are
subject to change.
For purposes of calculating pro rata pass-through distributions of principal, “pro rata” means,
for any amount of principal or interest to be paid, the application of a fraction to such amounts where
(a) the numerator is equal to the amount due to the owners of the Bonds on a payment date, and
(b) the denominator is equal to the total original par amount of the Bonds.
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It is the City’s intent that redemption allocations made by DTC with respect to the Bonds be
made on a pro rata pass-through distribution of principal basis as described above. However, the
City cannot provide any assurance that DTC, DTC’s direct and indirect participants, or any other
intermediary will allocate the redemption of such Bonds on such basis.
If the Bonds are not registered in book-entry form and if fewer than all of the Bonds of the
same maturity and bearing the same interest rate are to be redeemed, the Bonds of such maturity and
bearing such interest rate to be redeemed will be selected on a pro rata basis, and the particular Bonds
of such maturity and bearing such interest rate to be redeemed will be selected by lot, provided that
any such redemption must be performed such that all Bonds remaining outstanding will be in
authorized denominations.
Upon surrender of a Bond to be redeemed in part, the Trustee will authenticate for the
registered owner a new Bond or Bonds of the same maturity and tenor equal in principal amount to
the unredeemed portion of the Bond surrendered.
ARTICLE V
APPLICATION OF PROCEEDS;
SOURCE OF PAYMENT OF BONDS
Section 5.01 Application of Proceeds and City Contribution. The net proceeds of the
sale of the Bonds received by the Trustee, $__________ ($__________principal amount, less
$__________ underwriter’s discount), shall be deposited by the Trustee as follows:
(i) the sum of $__________ shall be deposited into the Costs of Issuance
Fund;
(ii) the sum of $__________ shall be transferred to PERS and used to pay
the Unfunded Liability relating to the City’s PERS Safety Plan; and
(iii) the sum of $__________ shall be transferred to PERS and used to pay
the Unfunded Liability relating to the City’s PERS Miscellaneous Plan.
The City shall provide written payment instructions to the Trustee for the transfers above to
PERS, upon which the Trustee may conclusively rely.
The Trustee may establish and maintain for so long as is necessary one or more temporary
funds and accounts under this Trust Agreement, including but not limited to a temporary fund for
holding the proceeds of the Bonds.
Section 5.02 Sources of Payment of Bonds; Semi-Annual Payments by the City.
(a) The City shall provide for payment of principal or redemption price of and
interest on the Bonds from any source of legally available funds of the City. If any Bonds are
Outstanding, the City shall, no later than three Business Days preceding each Interest Payment Date
beginning __________ 1, 20__, deliver funds to the Trustee for deposit to the Revenue Fund in an
aggregate amount equal to the portion of the Annual Debt Service coming due on such Interest
Payment Date (less amounts on deposit in the Revenue Fund).
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(b) The Bonds shall be obligations of the City payable from any lawfully
available funds, shall not be limited as to payment to any special source of funds of the City, and
shall be subject to appropriation in accordance with Section 8.01 hereof. The Bonds do not
constitute an obligation of the City for which the City is obligated to levy or pledge any form of
taxation or for which the City has levied or pledged any form of taxation.
ARTICLE VI
CREATION OF CERTAIN FUNDS AND ACCOUNTS
Section 6.01 Creation of Costs of Issuance Fund. There is hereby created a Fund to be
held by the Trustee designated “City of Santa Ana Taxable Pension Obligation Bonds, Series 2021,
Costs of Issuance Fund” (the “Costs of Issuance Fund”). Funds on deposit in the Costs of Issuance
Fund shall be used to pay or to reimburse the City for the payment of Costs of Issuance. Amounts in
the Costs of Issuance Fund shall be disbursed by the Trustee upon Written Requisition in the form of
Exhibit B executed by an Authorized City Representative.
At such time as the City delivers to the Trustee written notice that all Costs of Issuance have
been paid or otherwise notifies the Trustee in writing that no additional amounts from the Costs of
Issuance Fund will be needed to pay Costs of Issuance, the Trustee shall transfer all amounts then
remaining in the Costs of Issuance Fund to the Bond Interest Account of the City unless otherwise
directed by the City. At such time as no amounts remain in the Costs of Issuance Fund, such Fund
shall be closed.
Section 6.02 Creation of Revenue Fund and Certain Accounts. There is hereby created
a Fund to be held by the Trustee designated “City of Santa Ana Taxable Pension Obligation Bonds,
Series 2021, Revenue Fund” (the “Revenue Fund”). There are hereby created in the Revenue Fund
two separate Accounts designated “Bond Interest Account” and “Bond Principal Account”.
(a) All amounts received by the Trustee from the City in respect of interest
payments on the Bonds shall be deposited in the Bond Interest Account and shall be disbursed to the
applicable Bondholders to pay interest on the Bonds. All amounts held at any time in the Bond
Interest Account (including amounts deposited pursuant to Section 6.03) shall be held for the security
and payment of interest on the Bonds pursuant to this Trust Agreement. If at any time funds on
deposit in the Bond Interest Account are insufficient to provide for the payment of such interest, the
City shall promptly deposit funds to such Account to cure such deficiency. On __________ 2 of
each year beginning in [2021], so long as no Event of Default has occurred and is continuing, the
Trustee shall transfer all amounts on deposit in the Bond Interest Account to the Revenue Fund to be
used for any lawful purpose.
(b) All amounts received by the Trustee from the City in respect of principal
payments on the Bonds shall be deposited in the Bond Principal Account and all amounts in the Bond
Principal Account will be disbursed to pay principal on the Bonds pursuant to this Trust Agreement.
If at any time funds on deposit in the Bond Principal Account are insufficient to provide for the
payment of such principal, the City shall promptly deposit funds to such Account to cure such
deficiency.
(c) The moneys in such Funds and Accounts shall be held by the Trustee in trust
and applied as herein provided and, pending such application, shall be subject to a lien and charge in
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favor of the holders of the Bonds issued and Outstanding under this Trust Agreement and for the
further security of such holders until paid out or transferred as hereinafter provided.
Section 6.03 Creation of Redemption Fund. A Fund to be held by the Trustee is hereby
created and designated the “City of Santa Ana Taxable Pension Obligation Bonds, Series 2021,
Redemption Fund” (the “Redemption Fund”). All moneys deposited by the City with the Trustee
for the purpose of redeeming Bonds shall be deposited in the Redemption Fund. All amounts
deposited in the Redemption Fund shall be used and withdrawn by the Trustee solely for the purpose
of redeeming Bonds in the manner, at the times and upon the terms and conditions specified in this
Trust Agreement; provided that, at any time prior to giving such notice of redemption, the Trustee
shall, upon receipt of written instructions from an Authorized City Representative, apply such
amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including
brokerage and other charges) as directed by the City.
Section 6.04 Moneys Held in Redemption Fund. All moneys which shall have been
withdrawn from the Revenue Fund and deposited in the Redemption Fund for the purpose of paying
any of the Bonds hereby secured, either at the maturity thereof or upon call for redemption, shall be
held in trust for the respective Holders of such Bonds.
Section 6.05 Unclaimed Moneys. Any moneys which shall be set aside or deposited in
the Redemption Fund, the Bond Principal Account, the Bond Interest Account or any other Fund or
Account for the benefit of Holders of Bonds and which shall remain unclaimed by the Holders of
such Bonds for a period of one year after the date on which such Bonds shall have become due and
payable (or such longer period as shall be required by State law) shall be paid to the City, and
thereafter the Holders of such Bonds shall look only to the City for payment and the City shall be
obligated to make such payment, but only to the extent of the amounts so received without any
interest thereon, and the Trustee and any Paying Agent shall have no responsibility with respect to
any of such moneys.
ARTICLE VII
CONCERNING PAYING AGENT
Section 7.01 Paying Agent; Appointment and Acceptance of Duties. The City hereby
appoints the Trustee as the Paying Agent for the Bonds.
Section 7.02 Paying Agent - General Responsibilities.
(a) The City may at any time or from time to time appoint a different Paying
Agent or Paying Agents for the Bonds, and each Paying Agent, if other than the Trustee, shall be a
commercial bank with trust powers and shall designate to the City and the Trustee its principal office
and signify its acceptance of the duties and obligations imposed upon it hereunder by a written
instrument of acceptance delivered to the City under which each such Paying Agent will agree,
particularly:
(i) to hold all sums held by it for the payment of the principal of, and
premium or interest on, Bonds in trust for the benefit of the Bondholders until such sums shall be
paid to such Bondholders or otherwise disposed of as herein provided;
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(ii) to keep such books and records as shall be consistent with industry
practice, to make such books and records available for inspection by the City and the Trustee at all
reasonable times upon reasonable prior notice; and
(iii) upon the request of the Trustee, to forthwith deliver to the Trustee all
sums so held by such Paying Agent.
(b) The Paying Agent shall perform the duties and obligations set forth in this
Trust Agreement, and in particular shall hold all sums delivered to it by the Trustee for the payment
of principal or premium of and interest on the Bonds for the benefit of the Bondholders until such
sums shall be paid to such Bondholders or otherwise disposed of as herein provided.
(c) In performing its duties hereunder, the Paying Agent shall be entitled to all of
the rights, protections and immunities accorded to the Trustee under the terms of this Trust
Agreement.
Section 7.03 Certain Permitted Acts. Any Fiduciary may become the owner of any
Bonds, with the same rights it would have if it were not a Fiduciary. To the extent permitted by law,
any Fiduciary may act as depositary for, and permit any of its officers or directors to act as a member
of, or in any other capacity with respect to, any committee formed to protect the rights of
Bondholders or to effect or aid in any reorganization growing out of the enforcement of the Bonds or
this Trust Agreement, whether or not any such committee shall represent the owners of a majority in
Total Bond Obligation of the Bonds then Outstanding.
Section 7.04 Resignation or Removal of Paying Agent and Appointment of Successor.
(a) Any Paying Agent may at any time resign and be discharged of the duties and
obligations created by this Trust Agreement in accordance with the provisions set forth in this Trust
Agreement for the removal of the Trustee by giving at least 60 days’ written notice to the City and
the other Fiduciaries. Any Paying Agent may be removed at any time upon 30 days prior written
notice by an instrument filed with such Paying Agent and the Trustee and signed by an Authorized
City Representative. Any successor Paying Agent shall be appointed by the City with the approval
of the Trustee and shall be a commercial bank with trust powers or trust company organized under
the laws of any state of the United States, having capital stock and surplus aggregating at least
$100,000,000, and willing and able to accept the office on reasonable and customary terms and
authorized by law to perform all the duties imposed upon it by this Trust Agreement.
(b) In the event of the resignation or removal of any Paying Agent, such Paying
Agent shall assign and deliver any moneys and Bonds, including authenticated Bonds, held by it to
its successor, or if there be no successor, to the Trustee. In the event that for any reason there shall
be a vacancy in the office of any Paying Agent, the Trustee shall act as such Paying Agent.
ARTICLE VIII
COVENANTS OF THE CITY
Section 8.01 Payment of Principal and Interest. The City covenants and agrees that it
will duly and punctually pay or cause to be paid the principal, premium, if any, and interest on every
Bond at the place and on the dates and in the manner specified herein and in the Bonds, according to
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the true intent and meaning thereof, and that it will faithfully do and perform all covenants and
agreements contained herein and in the Bonds and the City agrees that time is of the essence of this
Trust Agreement. The obligations of the City under the Bonds, including the obligation to make all
payments of principal, premium, if any, and interest when due, are absolute and unconditional,
without any right of set-off or counter claim.
The City shall in each Fiscal Year include in its budget a provision to provide funds in an
amount sufficient to pay the principal, premium, if any, and interest on the Bonds coming due in such
Fiscal Year, but only to the extent that such amounts exceed the amount of available funds then on
deposit in the Revenue Fund, and shall make annual appropriations for all such amounts. If such
principal, premium, if any, and interest on the Bonds coming due in any Fiscal Year exceeds the sum
of amounts budgeted in respect thereof together with amounts then on deposit in the Revenue Fund,
then the City shall amend or supplement the budget to provide for such excess amounts. The
covenants contained in this Section shall be deemed to be and shall be duties imposed by law and it
shall be the duty of each and every public official of the City to take such action and do such things
as are required by law in the performance of the official duty of such officials to enable the City to
carry out and perform the covenants and agreements in this Trust Agreement agreed to be carried out
and performed by the City.
Section 8.02 Performance of Covenants by City; Authority; Due Execution. The City
covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations
and provisions contained in this Trust Agreement, in any and every Bond executed, authenticated and
delivered hereunder and in all of its proceedings pertaining hereto. The City covenants that it is duly
authorized under the Constitution and laws of the State to issue the Bonds.
Section 8.03 Instruments of Further Assurance. The City covenants that it will do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered such
further acts, instruments and transfers as the Trustee may reasonably request for the better assuring
and confirming to the Trustee all the rights and obligations of the City under and pursuant to this
Trust Agreement. The City shall, upon the reasonable request of the Trustee, from time to time
execute and deliver such further instructions and take such further action as may be reasonable and as
may be required to effectuate the purposes of this Trust Agreement or any provisions hereof;
provided, however, that no such instruments or actions shall pledge the full faith and credit or the
taxing powers of the State.
Section 8.04 No Inconsistent Action. The City covenants that no contract or contracts
will be entered into or any action taken by the City which shall be inconsistent with the provisions of
this Trust Agreement.
Section 8.05 No Adverse Action. The City covenants that it will not take any action
which will have a material adverse effect upon the rights of the Holders of the Bonds.
Section 8.06 Maintenance of Powers. The City covenants that it will at all times use its
best efforts to maintain the powers, functions, duties and obligations now reposed in it pursuant to
applicable law and will not at any time voluntarily do, suffer or permit any act or thing the effect of
which would be to hinder, delay or imperil either the payment of the indebtedness evidenced by any
of the Bonds or the performance or observance of any of the covenants herein contained.
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Section 8.07 Covenants of City Binding on Successors.
(a) All covenants, stipulations, obligations and agreements of the City contained
in this Trust Agreement shall be deemed to be covenants, stipulations, obligations and agreements of
the City to the full extent authorized or permitted by law. If the powers or duties of the City shall
hereafter be transferred by amendment of any provision of the Constitution or any other law of the
State or in any other manner there shall be a successor to the City, and if such transfer shall relate to
any matter or thing permitted or required to be done under this Trust Agreement by the City, then the
entity that shall succeed to such powers or duties of the City shall act and be obligated in the place
and stead of the City as provided in this Trust Agreement, and all such covenants, stipulations,
obligations and agreements herein shall be binding upon such successor or successors thereof from
time to time and upon any officer, board, body, district, authority or commission to whom or to
which any power or duty affecting such covenants, stipulations, obligations and agreements shall be
transferred by or in accordance with law.
(b) Except as otherwise provided in this Trust Agreement, all rights, powers and
privileges conferred and duties and liabilities imposed upon the City by the provisions of this Trust
Agreement shall be exercised or performed by the City or by such officers, board, body, district,
authority or commission as may be required by law to exercise such powers or to perform such
duties.
Section 8.08 Trust Agreement to Constitute a Contract. This Trust Agreement is
executed by the City for the benefit of the Bondholders and constitutes a contract with the
Bondholders.
Section 8.09 City to Perform Pursuant to Continuing Disclosure Certificate. The City
hereby covenants and agrees that it will comply with and carry out all of the provisions of the
Continuing Disclosure Certificate. Notwithstanding any other provision of this Trust Agreement,
failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an
Event of Default under this Trust Agreement; provided, however, the obligations of the City to
comply with the provisions of the Continuing Disclosure Certificate shall be enforceable by any
Participating Underwriter or any Holder of Outstanding Bonds, or by the Trustee on behalf of the
Holders of Outstanding Bonds; provided, further, that the Trustee shall not be required to take any
enforcement action whatsoever except at the written direction of the Holders of not less than a
majority in aggregate principal amount of the Bonds at the time Outstanding who shall have provided
the Trustee with security and indemnity to its satisfaction, including without limitation, attorney’s
fees and expenses. The Participating Underwriters’, Holders’ and Trustee’s rights to enforce the
provisions of the Continuing Disclosure Certificate shall be limited solely to a right, by action in
mandamus or for specific performance, to compel performance of the City’s obligations under the
Continuing Disclosure Certificate. Notwithstanding the foregoing, the City shall be entitled to
amend or rescind the Continuing Disclosure Certificate to the extent permitted by law.
ARTICLE IX
INVESTMENTS
Section 9.01 Investments Authorized. Money held by the Trustee in any fund or account
hereunder shall be invested by the Trustee in Permitted Investments pending application as provided
herein solely at the prior written direction of an Authorized City Representative, shall be registered in
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the name of the Trustee where applicable, as Trustee, and shall be held by the Trustee. The City
shall direct the Trustee prior to 12:00 p.m. Pacific time on the last Business Day before the date on
which a Permitted Investment matures or is redeemed as to the reinvestment of the proceeds thereof.
In the absence of such direction, the Trustee shall invest in investments authorized under clause (8)
contained in the definition of “Permitted Investments.” The Trustee may rely on the City’s
certification in such investment instructions that such investments are permitted by law and by any
policy guidelines promulgated by the City. Money held in any fund or account hereunder may be
commingled for purposes of investment only.
The Trustee may, with the prior written approval of an Authorized City Representative,
purchase from or sell to itself or any affiliate, as principal or agent, investments authorized by this
Section 9.01. Any investments and reinvestments shall be made after giving full consideration to the
time at which funds are required to be available hereunder and to the highest yield practicably
obtainable giving due regard to the safety of such funds and the date upon which such funds will be
required for the uses and purposes required by this Trust Agreement. The Trustee or any of its
affiliates may act as agent in the making or disposing of any investment and may act as sponsor or
advisor with respect to any Permitted Investment. For investment purposes, the Trustee may
commingle the funds and accounts established hereunder, but shall account for each separately.
The City acknowledges that to the extent regulations of the Comptroller of the Currency or
other applicable regulatory entity grant the City the right to receive brokerage confirmations of
security transactions as they occur, the City specifically waives receipt of such confirmations to the
extent permitted by law. The Trustee will furnish the City with periodic cash transaction statements
which shall include details for all investment transactions made by the Trustee hereunder.
Section 9.02 Reports. The Trustee shall furnish at least quarterly to the City a report
(which may be in the form of the Trustee’s regular account statements) of all investments made by
the Trustee and of all amounts on deposit in each fund and account maintained hereunder.
Section 9.03 Valuation and Disposition of Investments. For the purpose of determining
the amount in any fund or account hereunder, all Permitted Investments shall be valued at the market
value thereof not later than July 1 of each year. With the prior written approval of an Authorized
City Representative, the Trustee may sell at the best price obtainable, or present for redemption, any
Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide
money to meet any required payment, transfer, withdrawal or disbursement from any fund or account
hereunder, and the Trustee shall not be liable or responsible for any loss resulting from such
investment or sale, except any loss resulting from its own negligence or willful misconduct.
Section 9.04 Application of Investment Earnings. Investments in any Fund or Account
shall be deemed at all times to be a part of such Fund or Account, and any profit realized from such
investment shall be credited to such Fund or Account and any loss resulting from such investment
shall be charged to such Fund or Account. Interest earnings on investments in any Fund or Account
shall be deposited in the Bond Interest Account of the Revenue Fund.
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ARTICLE X
DEFEASANCE
Section 10.01 Discharge of Bonds; Release of Trust Agreement. Bonds or portions
thereof (such portions to be in an Authorized Denomination) which have been paid in full or which
are deemed to have been paid in full shall no longer be entitled to the benefits of this Trust
Agreement except for the purposes of payment from moneys and Defeasance Securities. When all
Bonds which have been issued under this Trust Agreement have been paid in full or are deemed to
have been paid in full, and all other sums payable hereunder by the City, including all necessary and
proper fees, compensation and expenses of the Trustee and any Paying Agents, have been paid or are
duly provided for, then the Trustee shall cancel, discharge and release this Trust Agreement, shall
execute, acknowledge and deliver to the City such instruments of satisfaction and discharge or
release as shall be requisite to evidence such release and such satisfaction and discharge and shall
assign and deliver to the City any amounts at the time subject to this Trust Agreement which may
then be in the Trustee’s possession, except funds or securities in which such funds are invested and
held by the Trustee or the Paying Agents for the payment of the principal, premium, if any, and
interest on the Bonds.
Section 10.02 Bonds Deemed Paid.
(a) A Bond shall be deemed to be paid within the meaning of this Article X and
for all purposes of this Trust Agreement when (i) payment with respect thereto of the principal,
interest and premium, if any, either (1) shall have been made or caused to be made in accordance
with the terms of the Bonds and this Trust Agreement or (2) shall have been provided for, as certified
to the Trustee by a Consultant who is a certified public accountant, by irrevocably depositing with
the Trustee in trust and irrevocably setting aside exclusively for such payment: (x) moneys sufficient
to make such payment, and/or (y) Defeasance Securities maturing as to principal and interest in such
amounts and at such times as will insure the availability of sufficient moneys to make such payment,
and (ii) all necessary and proper fees, compensation and expenses of the Trustee and any Paying
Agents pertaining to the Bonds with respect to which such deposit is made shall have been paid or
provision made for the payment thereof. At such times as Bonds shall be deemed to be paid
hereunder, such Bonds shall no longer be secured by or entitled to the benefits of this Trust
Agreement, except for the purposes of payment from such moneys and Defeasance Securities.
(b) Notwithstanding the foregoing paragraph, no deposit under clause (i)(2) of
the immediately preceding paragraph shall be deemed a payment of such Bonds until (i) proper
notice of redemption of such Bonds shall have been given in accordance with Section 4.01, or in the
event such Bonds are not to be redeemed within the next succeeding 60 days, until the City shall
have given the Trustee irrevocable instructions to notify, as soon as practicable, the holders of the
Bonds in accordance with Section 4.01, that the deposit required by clause (i)(2) above has been
made with the Trustee and that such Bonds are deemed to have been paid in accordance with this
Article X and stating the maturity or redemption date upon which moneys are to be available for the
payment of the principal of, premium, if any, and unpaid interest on such Bonds; or (ii) the maturity
of such Bonds.
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ARTICLE XI
DEFAULTS AND REMEDIES
Section 11.01 Events of Default. Each of the following events shall constitute and is
referred to in this Trust Agreement as an “Event of Default”:
(a) a failure to pay the principal or premium, if any, on any of the Bonds when
the same shall become due and payable at maturity or upon redemption;
(b) a failure to pay any installment of interest on any of the Bonds when such
interest shall become due and payable;
(c) a failure by the City to observe and perform any covenant, condition,
agreement or provision (other than as specified in clauses (a) and (b) of this Section 11.01) contained
in the Bonds or in this Trust Agreement on the part of the City to be observed or performed, which
failure shall continue for a period of 60 days after written notice, specifying such failure and
requesting that it be remedied, shall have been given to the City by the Trustee; provided, however,
that the Trustee shall be deemed to have agreed to an extension of such period if corrective action is
initiated by the City within such period and is being diligently pursued; or
(d) if the City files a petition in voluntary bankruptcy, for the composition of its
affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or
makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to
pay debts as they mature, or consents in writing to the appointment of a trustee or receiver for itself.
Upon its actual knowledge of the occurrence of any Event of Default, the Trustee shall
immediately give written notice thereof to the City.
Section 11.02 Remedies.
(a) Upon the occurrence and continuance of any Event of Default, the Trustee in
its discretion may, and shall upon the written direction of the holders of a majority of the Total Bond
Obligation of the Bonds then Outstanding and, in each case, receipt of indemnity to its satisfaction, in
its own name and as the Trustee of an express trust:
(1) by mandamus, or other suit, action or proceeding at law or in equity,
enforce all rights of the Bondholders hereunder, as the case may be, and require the City to carry out
any agreements with or for the benefit of the Bondholders and to perform its or their duties under the
Refunding Law or any other law to which it is subject and this Trust Agreement; provided that any
such remedy may be taken only to the extent permitted under the applicable provisions of this Trust
Agreement;
(2) bring suit upon the defaulted Bonds;
(3) commence an action or suit in equity to require the City to account as
if it were the trustee of an express trust for the Bondholders; or
(4) by action or suit in equity enjoin any acts or things which may be
unlawful or in violation of the rights of the Bondholders hereunder.
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(b) The Trustee shall be under no obligation to take any action with respect to
any Event of Default unless the Trustee has actual knowledge of the occurrence of such Event of
Default.
Section 11.03 Restoration to Former Position. In the event that any proceeding taken by
the Trustee to enforce any right under this Trust Agreement shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Trustee, then the City, the
Trustee and the Bondholders shall be restored to their former positions and rights hereunder,
respectively, and all rights, remedies and powers of the Trustee shall continue as though no such
proceeding had been taken.
Section 11.04 Bondholders’ Right to Direct Proceedings on their Behalf. Anything in
this Trust Agreement to the contrary notwithstanding, Holders of a majority in Total Bond Obligation
shall have the right, at any time, by an instrument in writing executed and delivered to the Trustee, to
direct the time, method and place of conducting all remedial proceedings on their behalf available to
the Trustee under this Trust Agreement to be taken in connection with the enforcement of the terms
of this Trust Agreement or exercising any trust or power conferred on the Trustee by this Trust
Agreement; provided that such direction shall not be otherwise than in accordance with the
provisions of the law and this Trust Agreement and that there shall have been provided to the Trustee
security and indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be
incurred as a result thereof by the Trustee; provided further that the Trustee shall have the right to
decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial
to Bondholders not parties to such direction.
Section 11.05 Limitation on Bondholders’ Rights to Institute Proceedings. No owner of
any Bond shall have the right to institute any suit, action or proceeding at law in equity, for the
protection or enforcement of any right or remedy under this Trust Agreement, or applicable law with
respect to such Bond, unless (a) such owner shall have given to the Trustee written notice of the
occurrence of an Event of Default; (b) the owners of not less than a majority in Total Bond
Obligation shall have made written request upon the Trustee to exercise the powers heretofore
granted or to institute such suit, action or proceeding in its own name; (c) such owner or said owners
shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request; (d) the Trustee shall have refused or failed to comply
with such request for a period of 60 days after such written request shall have been received by and
said tender of indemnity shall have been made to, the Trustee and (e) the Trustee shall not have
received contrary directions from the owners of a majority in aggregate principal amount of the Total
Bonds Obligation.
Section 11.06 No Impairment of Right to Enforce Payment. Notwithstanding any other
provision in this Trust Agreement, the right of any Bondholder to receive payment of the principal of
and interest on such Holder’s Bond, on or after the respective due dates expressed therein, or to
institute suit for the enforcement of any such payment on or after such respective date, shall not be
impaired or affected without the consent of such Bondholder.
Section 11.07 Proceedings by Trustee Without Possession of Bonds. All rights of action
under this Trust Agreement or under any of the Bonds secured hereby which are enforceable by the
Trustee may be enforced by it without the possession of any of the Bonds, or the production thereof
at the trial or other proceedings relative thereto, and any such suit, action or proceeding instituted by
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the Trustee shall be brought in its name for the equal and ratable benefit of the Bondholders, as the
case may be, subject to the provisions of this Trust Agreement.
Section 11.08 No Remedy Exclusive. No remedy herein conferred upon or reserved to the
Trustee or to Bondholders is intended to be exclusive of any other remedy or remedies, and each and
every such remedy shall be cumulative, and shall be in addition to every other remedy given
hereunder, or now or hereafter existing at law or in equity or by statute; provided, however, that any
conditions set forth herein to the taking of any remedy to enforce the provisions of this Trust
Agreement or the Bonds shall also be conditions to seeking any remedies under any of the foregoing
pursuant to this Section 11.08.
Section 11.09 No Waiver of Remedies. No delay or omission of the Trustee or of any
Bondholder to exercise any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver of any such default, or an acquiescence therein and every
power and remedy given by this Article XI to the Trustee and to the Bondholders, respectively, may
be exercised from time to time and as often as may be deemed expedient.
Section 11.10 Application of Moneys.
(a) Any moneys received by the Trustee for the benefit of Bondholders, by any
receiver or by any Bondholder pursuant to any right given or action taken under the provisions of this
Article XI, after payment of the costs and expenses of the proceedings resulting in the collection of
such moneys and of the fees, expenses, liabilities and advances incurred or made by the Trustee
(including without limitation reasonable fees and reasonable expenses of its attorneys), shall be
deposited in the Revenue Fund and all moneys so deposited in the Revenue Fund during the
continuance of an Event of Default shall be applied (i) first, to the payment to the persons entitled
thereto of all installments of interest then due on the Bonds, with interest on overdue installments, if
lawful, at the rate per annum borne by the Bonds, as the case may be, in the order of maturity of the
installments of such interest (if the amount available for such interest installments shall not be
sufficient to pay in full any particular installment of interest, then to the payment ratably, according
to the amounts due on such installment), and if the amount available for such interest shall not be
sufficient to make payment thereof, then to the payment thereof ratably according to the respective
aggregate amounts due and (ii) second, to the payment to the persons entitled thereto of the unpaid
principal, as applicable, of any of the Bonds which shall have become due with interest on such
Bonds at their respective rate from the respective dates upon which they became due (if the amount
available for such unpaid principal and interest shall not be sufficient to pay in full Bonds due on any
particular date, together with such interest, then to the payment ratably, according to the amount of
principal and interest due on such date, in each case to the persons entitled thereto, without any
discrimination or privilege among Holders of Bonds), and, if the amount available for such principal
and interest shall not be sufficient to make full payment thereof, then to the payment thereof ratably
according to the respective aggregate amounts due.
(b) Whenever moneys are to be applied pursuant to the provisions of this
Section 11.10, such moneys shall be applied at such times, and from time to time, as the Trustee shall
determine, having due regard to the amount of such moneys available for application and the
likelihood of additional moneys becoming available for such application in the future. Whenever the
Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless it
shall deem another date more suitable) upon which such application is to be made and upon such date
interest on the amounts to be paid on such date shall cease to accrue. The Trustee shall give notice of
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the deposit with it of any such moneys and of the fixing of any such date by Mail to all Bondholders
and shall not be required to make payment to any Bondholder until such Bonds shall be presented to
the Trustee for appropriate endorsement or for cancellation if fully paid.
Section 11.11 Severability of Remedies. It is the purpose and intention of this Article XI
to provide rights and remedies to the Trustee and the Bondholders which may be lawfully granted
under the provisions of applicable law, but should any right or remedy herein granted be held to be
unlawful, the Trustee and the Bondholders shall be entitled, as above set forth, to every other right
and remedy provided in this Trust Agreement and by applicable law.
Section 11.12 Additional Events of Default and Remedies. So long as any Bonds are
Outstanding, the Events of Default and remedies as set forth in this Article XI may be supplemented
with additional Events of Default and remedies as set forth from time to time in a supplemental
agreement.
ARTICLE XII
TRUSTEE; REGISTRAR
Section 12.01 Acceptance of Trusts. The Trustee hereby accepts and agrees to execute the
trusts specifically imposed upon it by this Trust Agreement, but only upon the additional terms set
forth in this Article XII, to all of which the City agrees and the respective Bondholders agree by their
acceptance of delivery of any of the Bonds.
Section 12.02 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall
exercise its rights and powers and use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties that are specifically set
forth in this Trust Agreement and no others; and
(ii) in the absence of negligence on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions expressed, upon certificates
or opinions furnished to the Trustee and conforming to the requirements of this Trust Agreement.
(c) The Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section 12.02;
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer unless the Trustee was negligent in ascertaining the pertinent facts;
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(iii) the Trustee shall not be liable with respect to any action it takes or
fails to take in good faith in accordance with a direction received by it from Bondholders or the City
in the manner provided in this Trust Agreement; and
(iv) no provision of this Trust Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers.
(d) Every provision of this Trust Agreement that in any way relates to the Trustee
is subject to all the paragraphs of this Section 12.02.
(e) The Trustee may refuse to perform any duty or exercise any right or power
unless it receives indemnity reasonably satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any cash held by it except as the
Trustee may agree with the City.
Section 12.03 Rights of Trustee.
(a) The recitals of facts contained herein and in the Bonds shall be taken as
statements of the City, and the Trustee assumes no responsibility for the correctness of the same
(other than the certificate of authentication of the Trustee on each Bond), and makes no
representations as to the validity or sufficiency of this Trust Agreement or of the Bonds or of any
Permitted Investment and shall not incur any responsibility in respect of any such matter, other than
in connection with the duties or obligations expressly assigned to or imposed upon it herein or in the
Bonds. The Trustee shall, however, be responsible for its representations contained in its certificate
of authentication on the Bonds. The Trustee shall not be liable in connection with the performance
of its duties hereunder, except for its own negligence, willful misconduct or breach of the express
terms and conditions hereof. The Trustee and its directors, officers, employees or agents may in
good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any
Holder of a Bond may be entitled to take, with like effect as if the Trustee was not the Trustee under
this Trust Agreement.
(b) The Trustee may execute any of the trusts or powers hereof and perform the
duties required of it hereunder by or through attorneys, agents or receivers, and shall be entitled to
advice of counsel concerning all matters of trust and its duty hereunder, and the opinion of such
counsel shall be authorization for any action taken or not taken in reliance on such opinion, but the
Trustee shall be answerable for the negligence or misconduct of any such attorney, agent or receiver
selected by it.
(c) No permissive power, right or remedy conferred upon the Trustee hereunder
shall be construed to impose a duty to exercise such power, right or remedy.
(d) The Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, coupon or other paper or document but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the City, personally or by agent or attorney.
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(e) The Trustee shall not be responsible for the application or handling by the
City of any moneys transferred to or pursuant to any requisition or request of the City in accordance
with the terms and conditions hereof.
(f) Whether or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Article XII.
(g) The Trustee shall be protected in acting upon any notice, resolution, request,
consent, order, certificate, report, facsimile transmission, electronic mail, opinion, note or other paper
or document believed by it to be genuine and to have been signed or presented by the proper party or
parties.
(h) The Trustee shall not be considered in breach of or in default in its
obligations hereunder or progress in respect thereto in the event of delay in the performance of such
obligations due to unforeseeable causes beyond its control and without its fault or negligence,
including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government,
acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes,
earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of
labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or
arbitration involving a party or others relating to zoning or other governmental action or inaction
pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays
of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the
control of the Trustee.
(i) The Trustee agrees to accept and act upon facsimile transmission of written
instructions and/or directions pursuant to this Trust Agreement provided, however, that:
(x) subsequent to such facsimile transmission of written instructions and/or directions the Trustee
shall forthwith receive the originally executed instructions and/or directions, (y) such originally
executed instructions and/or directions shall be signed by a person as may be designated and
authorized to sign for the party signing such instructions and/or directions, and (z) the Trustee shall
have received a current incumbency certificate containing the specimen signature of such designated
person.
Section 12.04 Individual Rights of Trustee. The Trustee in its individual or any other
capacity may become the owner or pledgee of Bonds and may otherwise deal with the City with the
same rights it would have if it were not Trustee. Any Paying Agent or other agent may do the same
with like rights.
Section 12.05 Trustee’s Disclaimer. The Trustee makes no representations as to the
validity or adequacy of this Trust Agreement or the Bonds, it shall not be accountable for the City’s
use of the proceeds from the Bonds paid to the City and it shall not be responsible for any statement
in any official statement or other disclosure document or in the Bonds other than its certificate of
authentication.
Section 12.06 Notice of Defaults. If an event occurs which with the giving of notice or
lapse of time or both would be an Event of Default, and if the event is continuing and if it is actually
known to the Trustee, the Trustee shall mail to each Bondholder notice of the event within 90 days
after it occurs. Except in the case of a default in payment or purchase on any Bonds, the Trustee may
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withhold the notice to Bondholders if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Bondholders.
Section 12.07 Compensation of Trustee. The City shall from time to time, but only in
accordance with a written agreement in effect with the Trustee, pay to the Trustee reasonable
compensation for its services and shall reimburse the Trustee for all its reasonable advances and
expenditures, including but not limited to advances to and fees and expenses of independent
appraisers, accountants, consultants, counsel, agents and attorneys-at-law or other experts employed
by it in the exercise and performance of its powers and duties hereunder. The Trustee shall not
otherwise have any claims or lien for payment of compensation for its services against any other
moneys held by it in the funds or accounts established hereunder, except as provided in
Section 11.10, but may take whatever legal actions are lawfully available to it directly against the
City. To the extent permitted by applicable law, the City agrees to indemnify and save the Trustee,
its officers, employees, directors and agents, harmless against any costs, expenses, claims or
liabilities whatsoever, including, without limitation, fees and expenses of its attorneys, that it may
incur in the exercise and performance of its powers and duties hereunder which are not due to its
negligence or willful misconduct. The agreement contained in this Section shall survive the payment
of the Bonds, the discharge of this Trust Agreement and the appointment of a successor trustee.
Section 12.08 Eligibility of Trustee. This Trust Agreement shall always have a Trustee
that is a trust company, a bank or association having trust powers and is organized and doing
business under the laws of the United States or any state or the District of Columbia, is subject to
supervision or examination by United States, state or District of Columbia authority and has a
combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual
report of condition.
Section 12.09 Replacement of Trustee.
(a) The Trustee may resign as trustee hereunder by notifying the City in writing
prior to the proposed effective date of the resignation. The Holders of a majority in Total Bond
Obligation of the Bonds may remove the Trustee by notifying the removed Trustee and may appoint
a successor Trustee with the City’s consent. The City may remove the Trustee, by notice in writing
delivered to the Trustee 30 days prior to the proposed removal date; provided, however, that the City
shall have no right to remove the Trustee during any time when an Event of Default has occurred and
is continuing unless (i) the Trustee fails to comply with the foregoing Section, (ii) the Trustee is
adjudged a bankrupt or an insolvent, (iii) the Trustee otherwise becomes incapable of acting or
(iv) the City determines that the Trustee’s services are no longer satisfactory to the City. No
resignation or removal of the Trustee under this Section shall be effective until a new Trustee has
taken office. If the Trustee resigns or is removed or for any reason is unable or unwilling to perform
its duties under this Trust Agreement, the City shall promptly appoint a successor Trustee.
(b) A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the City. Immediately thereafter, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring
Trustee shall then (but only then) become effective and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Trust Agreement. If a Trustee is not performing its duties
hereunder and a successor Trustee does not take office within 60 days after the retiring Trustee
delivers notice of resignation or the City delivers notice of removal, the retiring Trustee, the City or
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the Holders of a majority in Total Bond Obligation of the Bonds may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
Section 12.10 Successor Trustee or Agent by Merger. If the Trustee, any Paying Agent
or Registrar consolidates with, merges or converts into, or transfers all or substantially all its assets
(or, in the case of a bank or trust company, its corporate trust business) to, another corporation, the
resulting, surviving or transferee corporation without any further act shall be the successor Trustee,
Paying Agent or Registrar.
Section 12.11 Registrar. The City shall appoint the Registrar for the Bonds and may from
time to time remove a Registrar and name a replacement upon notice to the Trustee. The City hereby
appoints the Trustee as Registrar. Each Registrar, if other than the Trustee, shall designate to the
Trustee, the Paying Agent, and the City its principal office and signify its acceptance of the duties
imposed upon it hereunder by a written instrument of acceptance delivered to the City and the
Trustee under which such Registrar will agree, particularly, to keep such books and records as shall
be consistent with prudent industry practice and to make such books and records available for
inspection by the City, the Trustee, and the Paying Agent at all reasonable times.
Section 12.12 Other Agents. The City or the Trustee may from time to time appoint other
agents to perform duties and obligations under this Trust Agreement which agents may include, but
not be limited to, authenticating agents all as provided by resolution of the City.
Section 12.13 Several Capacities. Anything in this Trust Agreement to the contrary
notwithstanding, the same entity may serve hereunder as the Trustee, Registrar and any other agent
as appointed to perform duties or obligations under this Trust Agreement or an escrow agreement, or
in any combination of such capacities, to the extent permitted by law.
Section 12.14 Accounting Records and Reports of Trustee.
(a) The Trustee shall at all times keep, or cause to be kept, proper books of
record and account in which complete and accurate entries shall be made of all transactions made by
it relating to the proceeds of the Bonds and all Funds and Accounts established pursuant to this Trust
Agreement and held by the Trustee. Such books of record and account shall be available for
inspection by the City and any Bondholder, or his or her agent or representative duly authorized in
writing, upon reasonable prior notice, at reasonable hours and under reasonable circumstances.
(b) The Trustee shall file and furnish to the City and to each Bondholder who
shall have filed his or her name and address with the Trustee for such purpose (at such Bondholder’s
cost), on an annual basis (or, with respect to the City, such other interval that the City may request), a
complete financial statement (which may be its regular account statements and which need not be
audited) covering receipts, disbursements, allocation and application of moneys in any of the funds
and accounts established pursuant to this Trust Agreement for the preceding year.
Section 12.15 No Remedy Exclusive. No remedy herein conferred upon or reserved to the
City is intended to be exclusive of any other remedy or remedies, and each and every such remedy
shall be cumulative, and shall be in addition to every other remedy given hereunder, or now or
hereafter existing at law or in equity or by statute.
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ARTICLE XIII
MODIFICATION OF THIS TRUST AGREEMENT
Section 13.01 Limitations. This Trust Agreement shall not be modified or amended in any
respect subsequent to the first delivery of fully executed and authenticated Bonds except as provided
in and in accordance with and subject to the provisions of this Article XIII.
Section 13.02 Supplemental Agreements Not Requiring Consent of Bondholders.
(a) The City may, from time to time and at any time, without the consent of or
notice to the Bondholders, execute and deliver supplemental agreements supplementing and/or
amending this Trust Agreement as follows:
(i) to cure any defect, omission, inconsistency or ambiguity in this Trust
Agreement;
(ii) to add to the covenants and agreements of the City in this Trust
Agreement other covenants and agreements, or to surrender any right or power reserved or conferred
upon the City, and which shall not adversely affect the interests of the Bondholders;
(iii) to confirm, as further assurance, any interest of the Trustee in and to
the Funds and Accounts held by the Trustee or in and to any other moneys, securities or funds of the
City provided pursuant to this Trust Agreement or to otherwise add security for the Bondholders;
(iv) to comply with the requirements of the Trust Indenture Act of 1939,
as from time to time amended;
(v) to modify, alter, amend or supplement this Trust Agreement in any
other respect which, in the judgment of the City, is not materially adverse to the Bondholders;
(vi) to qualify the Bonds for a rating or ratings by any Rating Agency; and
(vii) to authorize the issuance of Additional Bonds in accordance with this
Trust Agreement.
(b) Before the City shall, pursuant to this Section 13.02, execute any
supplemental agreement there shall have been delivered to the City an opinion of Bond Counsel to
the effect that such supplemental agreement (i) is authorized or permitted by this Trust Agreement
and the Refunding Law, and (ii) will, upon the execution and delivery thereof, be valid and binding
upon the City in accordance with its terms, subject to the typical exceptions.
Section 13.03 Supplemental Agreement Requiring Consent of Bondholders.
(a) Except for any supplemental agreement entered into pursuant to
Section 13.02, the Holders of not less than a majority in Total Bond Obligation shall have the right
from time to time to consent to and approve the execution by the City of any supplemental agreement
deemed necessary or desirable by the City for the purposes of modifying, altering, amending,
supplementing or rescinding, in any particular, any of the terms or provisions contained in this Trust
Agreement or in a supplemental agreement; provided, however, that, unless approved in writing by
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the Holders of all the Bonds then Outstanding, nothing contained herein shall permit or be construed
as permitting (i) a change in the times, amounts or currency of payment of the principal of or interest
on any Outstanding Bonds or (ii) a reduction in the principal amount or redemption price of any
Outstanding Bonds or the rate of interest thereon; and provided that nothing contained herein,
including the provisions of Section 13.03(b) below, shall, unless approved in writing by the Holders
of all the Bonds then Outstanding, permit or be construed as permitting (1) a preference or priority of
any Bond or Bonds over any other Bond or Bonds or (2) a reduction in the aggregate principal
amount of Bonds the consent of the Holders of which is required for any such supplemental
agreement. Nothing herein contained, however, shall be construed as making necessary the approval
by Holders of the execution of any supplemental agreement as authorized in Section 13.02.
(b) If at any time the City shall desire to enter into any supplemental agreement
for any of the purposes of this Section 13.03, the City shall cause notice of the proposed execution of
the supplemental agreement to be given by Mail to all Holders. Such notice shall briefly set forth the
nature of the proposed supplemental agreement and shall state that a copy thereof is on file at the
office of the City for inspection by all Holders.
(c) Within two weeks after the date of the first mailing of such notice, the City
may execute and deliver such supplemental agreement in substantially the form described in such
notice, but only if there shall have first been delivered to the City (i) the required consents, in writing,
of Holders and (ii) an opinion of Bond Counsel stating that such supplemental agreement is
authorized or permitted by this Trust Agreement and other applicable law, complies with their
respective terms and, upon the execution and delivery thereof, will be valid and binding upon the
City in accordance with its terms.
(d) If Holders of not less than the percentage of Bonds required by this
Section 13.03 shall have consented to and approved the execution and delivery thereof as herein
provided, no Holders shall have any right to object to the adoption of such supplemental agreement,
or to object to any of the terms and provisions contained therein or the operation thereof, or in any
manner to question the propriety of the execution and delivery thereof, or to enjoin or restrain the
City from executing the same or from taking any action pursuant to the provisions thereof.
Section 13.04 Effect of Supplemental Agreements. Upon execution and delivery of any
supplemental agreement pursuant to the provisions of this Article XIII, this Trust Agreement and all
supplemental agreements shall be, and shall be deemed to be, modified and amended in accordance
therewith, and the respective rights, duties and obligations under this Trust Agreement and all
supplemental agreements of the City, the Trustee, the Registrar, any Paying Agent and all Holders
shall thereafter be determined, exercised and enforced under this Trust Agreement and all
supplemental agreements, subject in all respects to such modifications and amendments.
Section 13.05 Supplemental Agreements to be Part of this Trust Agreement. Any
supplemental agreement adopted in accordance with the provisions of this Article XIII shall
thereafter form a part of this Trust Agreement or the supplemental agreement which they supplement
or amend, and all of the terms and conditions contained in any such supplemental agreement as to
any provision authorized to be contained therein shall be and shall be deemed to be part of the terms
and conditions of this Trust Agreement which they supplement or amend for any and all purposes.
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.01 Parties in Interest. Except as herein otherwise specifically provided,
nothing in this Trust Agreement expressed or implied is intended or shall be construed to confer upon
any person, firm or corporation other than the City, the Paying Agent, the Trustee, and the
Bondholders any right, remedy or claim under or by reason of this Trust Agreement, this Trust
Agreement being intended to be for the sole and exclusive benefit of the City, the Paying Agent, the
Trustee and the Bondholders.
Section 14.02 Severability. In case any one or more of the provisions of this Trust
Agreement, or of any Bonds issued hereunder shall, for any reason, be held to be illegal or invalid,
such illegality or invalidity shall not affect any other provisions of this Trust Agreement or of Bonds,
and this Trust Agreement and any Bonds issued hereunder shall be construed and enforced as if such
illegal or invalid provisions had not been contained herein or therein.
Section 14.03 No Personal Liability of City Officials; Limited Liability of City to
Bondholders.
(a) No covenant or agreement contained in the Bonds or in this Trust Agreement
shall be deemed to be the covenant or agreement of any present or future official, officer, agent or
employee of the City in their individual capacity, and neither the members of the City Council of the
City nor any person executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof.
(b) Except for the payment when due of the payments and the observance and
performance of the other agreements, conditions, covenants and terms required to be performed by it
contained in this Trust Agreement, the City shall not have any obligation or liability to the
Bondholders with respect to this Trust Agreement or the preparation, execution, delivery, transfer,
exchange or cancellation of the Bonds or the receipt, deposit or disbursement of the payments by the
Trustee, or with respect to the performance by the Trustee of any obligation required to be performed
by it contained in this Trust Agreement.
Section 14.04 Execution of Instruments; Proof of Ownership.
(a) Any request, direction, consent or other instrument in writing required or
permitted by this Trust Agreement to be signed or executed by Bondholders or on their behalf by an
attorney-in-fact may be in any number of concurrent instruments of similar tenor and may be signed
or executed by such Bondholders in person or by an agent or attorney-in-fact appointed by an
instrument in writing or as provided in the Bonds. Proof of the execution of any such instrument and
of the ownership of Bonds shall be sufficient for any purpose of this Trust Agreement and shall be
conclusive in favor of the Trustee with regard to any action taken by it under such instrument if made
in the following manner:
(i) the fact and date of the execution by any person of any such
instrument may be proved by the certificate of any officer in any jurisdiction who, by the laws
thereof, has power to take acknowledgments within such jurisdiction, to the effect that the person
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signing such instrument acknowledged before him the execution thereof, or by an affidavit of a
witness to such execution; and
(ii) the ownership of Bonds shall be proved by the registration books kept
under the provisions of Section 3.01 hereof;
(b) Nothing contained in this Section 14.04 shall be construed as limiting the
Trustee to such proof. The Trustee may accept any other evidence of matters herein stated which it
may deem sufficient. Any request, consent of, or assignment by any Bondholder shall bind every
future Bondholder of the same Bonds or any Bonds issued in lieu thereof in respect of anything done
by the Trustee or the City in pursuance of such request or consent.
Section 14.05 Governing Law; Venue. This Trust Agreement is made in the State under
the Constitution and laws of the State and is to be so construed. If any party to this Trust Agreement
initiates any legal or equitable action to enforce the terms of this Trust Agreement, to declare the
rights of the parties under this Trust Agreement or which relates to this Trust Agreement in any
manner, each such party agrees that the place of making and for performance of this Trust Agreement
shall be the City of Santa Ana, State of California, and the proper venue for any such action is the
Superior Court of the State of California, in and for the County of Orange, Central Division.
Section 14.06 Notices.
(a) Any notice, request, direction, designation, consent, acknowledgment,
certification, appointment, waiver or other communication required or permitted by this Trust
Agreement or the Bonds must be in writing except as expressly provided otherwise in this Trust
Agreement or the Bonds.
(b) The Trustee shall give written notice to the Rating Agencies if at any time
(i) a successor Trustee is appointed under this Trust Agreement, (ii) there is any amendment to this
Trust Agreement, (iii) Bonds are to be redeemed pursuant to Section 4.02, (iv) notice of any
defeasance of the Bonds has been provided, or (v) if the Bonds shall no longer be Book-Entry Bonds.
Notice in the case of an event referred to in clause (ii) hereof shall include a copy of any such
amendment.
(c) Except as otherwise required herein, all notices required or authorized to be
given to the City, the Trustee and Paying Agent, and the Rating Agencies pursuant to this Trust
Agreement shall be in writing and shall be sent by registered or certified mail, postage prepaid, to the
following addresses:
1. if to the City, to:
City of Santa Ana
20 Civic Center Plaza
Santa Ana, California 92701
Attention: City Manager
Telephone: (714) 647-5400
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2. if to the Trustee and Paying Agent, to:
U.S. Bank National Association
Global Corporate Trust
LM-CA-T24T
633 West 5th Street, 24th Floor
Los Angeles, California 90071
Telephone: (213) 615-6062
3. if to S&P, to:
S&P Global Ratings
55 Water Street
New York, New York 10041
or to such other addresses as may from time to time be furnished to the parties, effective upon the
receipt of notice thereof given as set forth above.
Section 14.07 Holidays. If the date for making any payment or the last date for
performance of any act or the exercising of any right, as provided in this Trust Agreement, shall not
be a Business Day, such payment may, unless otherwise provided in this Trust Agreement be made
or act performed or right exercised on the next succeeding Business Day with the same force and
effect as if done on the nominal date provided in this Trust Agreement, and no interest shall accrue
for the period from and after such nominal date.
Section 14.08 Captions. The captions and table of contents in this Trust Agreement are for
convenience only and do not define or limit the scope or intent of any provisions or Sections of this
Trust Agreement.
Section 14.09 Counterparts. This Trust Agreement may be signed in several counterparts,
each of which will be an original, but all of them together constitute the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement by their
officers thereunto duly authorized as of the date first above written.
CITY OF SANTA ANA
By:
City Manager
ATTEST:
City Clerk
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
Authorized Officer
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EXHIBIT A
FORM OF BOND
Unless this Bond is presented by an authorized representative of The Depository
Trust Company, a New York corporation (“DTC”), to the City of Santa Ana or its
agent for registration of transfer, exchange, or payment, and any Bond issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
No. ____ $_____________
CITY OF SANTA ANA
TAXABLE PENSION OBLIGATION BONDS, SERIES 2021
Neither the faith and credit nor the taxing power of the State of California or any
public agency is pledged to the payment of the principal of, or interest on, this
Bond.
Maturity
Interest Rate
Per Annum
Dated
Date
CUSIP
NO.
__________ 1, ____ _____% __________, 2021 __________
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: _________________ AND NO/100 DOLLARS
THE CITY OF SANTA ANA, a charter city and municipal corporation duly organized and
validly existing under and pursuant to the Constitution and the laws of the State of California and its
charter, for value received, hereby promises to pay to the registered owner named above or registered
assigns, on the maturity date specified above, the principal sum specified above together with interest
on such principal sum at the rates determined as herein provided on each Interest Payment Date
(hereinafter defined) from the Interest Payment Date next preceding the date of authentication and
delivery thereof, unless (i) such date of authentication is an Interest Payment Date in which event
interest shall be payable from such date of authentication; (ii) it is authenticated after a Record Date
and before the close of business on the immediately following Interest Payment Date, in which event
interest thereon shall be payable from such Interest Payment Date; or (iii) it is authenticated prior to
the close of business on the first Record Date, in which event interest thereon shall be payable from
its Dated Date; provided, however, that if at the time of authentication of any Bond interest thereon is
in default, interest thereon shall be payable from the Interest Payment Date to which interest has
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4846-5351-8811v3/200434-0005
previously been paid or made available for payment or, if no interest has been paid or made available
for payment, from its Dated Date. The principal hereof and premium, if any, hereon are payable
when due upon presentation hereof at the Principal Office of U.S. Bank National Association, as
trustee (together with any successor as trustee under the Trust Agreement (hereinafter defined), the
“Trustee”), in lawful money of the United States of America.
This Bond is one of a duly authorized issue of City of Santa Ana Taxable Pension Obligation
Bonds, Series 2021 (the “Bonds”) of the designation indicated on the face hereof. Said authorized
issue of Bonds is limited in aggregate principal amount as provided in the Trust Agreement and
consists or may consist of one or more series of varying denominations, dates, maturities, interest
rates and other provisions, as provided in the Trust Agreement, all issued and to be issued pursuant to
the provisions of Articles 10 and 11 (commencing with section 53570 of Chapter 3 of Division 2 of
Title 5 of the California Government Code (the “Refunding Law”). This Bond is issued pursuant to
the Trust Agreement dated as of __________ 1, 2021 by and between the City of Santa Ana and the
Trustee, providing for the issuance of the Bonds and setting forth the terms and authorizing the
issuance of the Bonds (said Trust Agreement as amended, supplemented or otherwise modified from
time to time being the “Trust Agreement”). Reference is hereby made to the Trust Agreement and
to the Refunding Law for a description of the terms on which the Bonds are issued and to be issued,
and the rights of the registered owners of the Bonds; and all the terms of the Trust Agreement and the
Refunding Law are hereby incorporated herein and constitute a contract between the City and the
registered owner from time to time of this Bond, and to all the provisions thereof the registered
owner of this Bond, by its acceptance hereof, consents and agrees. All capitalized terms used herein
and not otherwise defined shall have the meanings given such terms in the Trust Agreement.
The City is required under the Trust Agreement to make payments on the Bonds from any
source of legally available funds. The City has covenanted to make the necessary annual
appropriations for such purpose.
The obligation of the City to make payments on the Bonds does not constitute an obligation
of the City for which the City is obligated to levy or pledge any form of taxation or for which the
City has levied or pledged any form of taxation.
This Bond is one of the Bonds described in the Trust Agreement.
Interest on Bonds
Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months.
The Bonds or the principal portion thereof called for redemption will cease to bear interest after the
specified redemption date, provided that notice has been given pursuant to the Trust Agreement and
sufficient funds for redemption are on deposit at the place of payment on the redemption date.
Redemption of Bonds
Optional Redemption. The Bonds maturing on or after __________ 1, 20__ may be
redeemed at the option of the City from any source of funds on any date on or after __________ 1,
20__ in whole or in part from such maturities as are selected by the City within a maturity at a
redemption price equal to the principal amount to be redeemed, together with accrued interest to the
date of redemption, without premium.
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Mandatory Sinking Fund Redemption of Bonds. The Bonds maturing __________ 1,
20__ (the “Term Bonds”) are subject to mandatory sinking fund redemption at a redemption price
equal to the principal amount thereof, plus accrued interest to the redemption date, without premium.
The Term Bonds shall be so redeemed on the following dates and in the following amounts:
Redemption Date
(__________ 1)
Principal
Amount
*
* Final maturity.
[Make-Whole Redemption. The Bonds shall be subject to make-whole redemption on any
date as more fully set forth in the Trust Agreement.]
Certain Defined Terms
“Interest Payment Date” means __________ 1 and __________ 1 of each year,
commencing __________ 1, 20__.
“Record Date” means the fifteenth day of each calendar month preceding any Interest
Payment Date, regardless of whether such day is a Business Day.
Other Provisions
The rights and obligations of the City and of the holders and registered owners of the Bonds
may be modified or amended at any time in the manner, to the extent, and upon the terms provided in
the Trust Agreement, which provide, in certain circumstances, for modifications and amendments
without the consent of or notice to the registered owners of the Bonds.
It is hereby certified and recited that any and all acts, conditions and things required to exist,
to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by
this Bond, and in the issuing of this Bond, do exist, have happened and have been performed in due
time, form and manner, as required by the Constitution and statutes of the State of California, and
that this Bond, is within every debt and other limit prescribed by the Constitution and the statutes of
the State of California, and is not in excess of the amount of Bonds permitted to be issued under the
Trust Agreement or the Refunding Law.
This Bond shall not be entitled to any benefit under the Trust Agreement, or become valid or
obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been
manually signed by the Trustee.
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IN WITNESS WHEREOF, THE CITY OF SANTA ANA, a charter city and municipal
corporation duly organized and validly existing under and pursuant to the Constitution and the laws
of the State of California and its charter, has caused this Bond to be executed in its name and on its
behalf by the Mayor of the City Council, and attested by the City Clerk, and this Bond to be dated as
of the Dated Date.
CITY OF SANTA ANA
By:
Mayor
ATTEST:
City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-mentioned Trust Agreement and
authenticated the date set forth below.
Dated: ____________
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
Authorized Signatory
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a
Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated
as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City of Santa Ana
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[FORM OF ASSIGNMENT]
For value received _____________________ hereby sells, assigns and transfers unto
__________________ (Tax I.D. No.: __________________) the within Bond and hereby
irrevocably constitute and appoints ____________________ attorney, to transfer the same on the
books of the City at the office of the Trustee, with full power of substitution in the premises.
NOTE: The signature to this Assignment must
correspond with the name on the face of the within
Registered Bond in every particular, without alteration
or enlargement or any change whatsoever.
Dated: _______________
Signature Guaranteed by:
NOTE: Signature must be guaranteed by an eligible
guarantor institution.
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EXHIBIT B
FORM OF REQUISITION
TO: [Trustee] City of Santa Ana Use Only
Request No. __
DISBURSEMENT REQUEST: REGARDING $__________ CITY OF SANTA ANA TAXABLE
PENSION OBLIGATION BONDS, SERIES 2021
You are hereby requested to pay from the Costs of Issuance Fund established by the Trust Agreement
with respect to the above-referenced bonds, to the person, corporation or other entity designated
below as Payee, the sum set forth below such designation, in payment of all ( ) or a portion ( ) of the
Costs of Issuance described below.
Name of Payee:
Address:
Amount: $____________
Method of Payment: ___________________
Service Provided:
The undersigned hereby certifies that:
(i) s/he is an Authorized City Representative;
(ii) this requisition for payment is in accordance with the terms and provisions of
Section 6.01 of the Trust Agreement;
(iii) each item to be paid with the requisitioned funds represents either incurred or due and
payable Costs of Issuance;
(iv) such Costs of Issuance have not been paid from other funds withdrawn from the
Costs of Issuance Fund; and
(v) to the best of the signatory’s knowledge no Event of Default has occurred and is
continuing under the Trust Agreement.
Dated: _____________ CITY OF SANTA ANA
By:
Name:
Title:
Stradling Yocca Carlson & Rauth
Draft of March 3, 2021
4821-4853-6027v3/200434-0005
$_________
CITY OF SANTA ANA
TAXABLE PENSION OBLIGATION BONDS, SERIES 2021
BOND PURCHASE AGREEMENT
___________, 2021
City of Santa Ana
20 Civic Center Plaza
Santa Ana, California 92701
Ladies and Gentlemen:
The undersigned _______________ (the “Representative”), on behalf of itself and on behalf
of _______________ (collectively, the “Underwriter”) offers to enter into this Bond Purchase
Agreement (this “Purchase Agreement”) with the City of Santa Ana, California (the “City”), which,
upon the acceptance by the City, will be binding upon the City and the Underwriter. This offer is
made subject to acceptance by the City by the execution of this Purchase Agreement and delivery of
the same to the Underwriter prior to 11:59 P.M., California time, on the date hereof, and, if not so
accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any
time prior to the acceptance hereof by the City. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Trust Agreement (defined herein).
Section 1. Purchase and Sale. Upon the terms and conditions and on the basis of the
representations, warranties and agreements herein set forth, the Underwriter hereby agrees to
purchase from the City, and the City hereby agrees to issue, sell and deliver to the Underwriter all
(but not less than all) of the City of Santa Ana Taxable Pension Obligation Bonds, Series 2021 (the
“Bonds”) in the aggregate principal amount of $________. The Bonds shall be dated as of their date
of delivery. Interest on the Bonds shall be payable semiannually on [July] 1 and [January] 1 in each
year, commencing ________ 1, 2021 (each an “Interest Payment Date”) and will bear interest at the
rates and on the dates as set forth in Exhibit A hereto. The purchase price for the Bonds shall be
$________ (which represents the principal amount of the Bonds in the amount of $________, less an
Underwriter’s discount of $________.
The Underwriter agrees to make a bona fide public offering of the Bonds at the initial
offering yields set forth in the Official Statement (defined herein); however, the Underwriter reserves
the right to make concessions to dealers and to change such initial offering yields as the Underwriter
shall deem necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in
connection with the public offering and initial delivery of the Bonds to the purchasers thereof from
the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the
final Official Statement prepared in connection with the Bonds, for the time period required under
Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-
12”). Terms defined in the Preliminary Official Statement, and to be set forth in the final Official
Statement are used herein as so defined.
EXHIBIT 3
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The City acknowledges and agrees that: (i) the purchase and sale of the Bonds pursuant to
this Purchase Agreement is an arm’s-length commercial transaction between the City and the
Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures
leading up to the consummation of such transaction, the Underwriter is and has been acting solely as
a principal and is not acting as a municipal advisor (as defined in section 15B of the Securities
Exchange Act of 1934, as amended), financial advisor or fiduciary; (iii) the Underwriter has not
assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering
contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of
whether the Underwriter has provided other services or is currently providing other services to the
City on other matters); (iv) the only obligations the Underwriter has to the City with respect to the
transaction contemplated hereby expressly are set forth in this Purchase Agreement; and (v) the City
has consulted its own financial and/or municipal, legal, accounting, tax, financial and other advisors,
as applicable, to the extent it has deemed appropriate.
Section 2. The Bonds. The Bonds are being issued pursuant to Articles 10 and 11
(commencing with section 53570) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California
Government Code (the “Refunding Law”) and the Trust Agreement, dated as of ________ 1, 2021
(the “Trust Agreement”), between the City and U.S. Bank National Association as trustee (together
with any successor as trustee under the Trust Agreement, the “Trustee”). The Bonds shall be
obligations of the City payable from any lawfully available funds, shall not be limited as to payment
to any special source of funds of the City and the payment thereof shall not be subject to
appropriation. The Bonds do not constitute an obligation of the City for which the City is obligated
to levy or pledge any form of taxation or for which the City has levied or pledged any form of
taxation. The Bonds otherwise shall be as described in the Preliminary Official Statement and the
Official Statement, the Refunding Law and the Legal Documents. The Underwriter’s agreement to
purchase the Bonds from the City is made in reliance upon the City’s representations, covenants and
warranties and on the terms and conditions set forth in this Purchase Agreement.
The City is obligated by the Public Employees’ Retirement Law, constituting Part 3 of
Division 5 of Title 2 of the California Government Code (the “Retirement Law”), and the contract
between the Board of Administration of the California Public Employees’ Retirement System
(“PERS”), established under Government Code sections 20000 through 21500 of (the “Retirement
Law”), and the City Council of the City, effective July 1, 1948 (as amended, the “PERS Contract”),
to make contributions to PERS to (a) fund pension benefits for its employees who are members of
PERS, (b) amortize the unfunded actuarial liability with respect to such pension benefits, and
(c) appropriate funds for the purposes described in (a) and (b). The City participates in two
retirement plans (with tiers within such plans) under the PERS Contract.
The proceeds of the Bonds will be used to: (i) refund the City’s obligations to PERS
evidenced by the two retirement plans in which the City participates pursuant to the PERS Contract
and representing the current unfunded accrued liability (the “Unfunded Liability”) with respect to
certain pension benefits under the Retirement Law, and (ii) pay certain costs associated with the
issuance and delivery of the Bonds.
Section 3. Public Offering. The Underwriter agrees to make an initial public offering
of all the Bonds at the public offering prices (or yields) set forth on Exhibit A attached hereto and
incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves
the right to change the public offering prices (or yields) as it deems necessary in connection with the
marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on
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Exhibit A. The Bonds may be offered and sold to certain dealers at prices lower than such initial
public offering prices.
Section 4. The Official Statement. By its acceptance of this Purchase Agreement, the
City ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date
hereof of the Preliminary Official Statement relating to the Bonds, dated _________, 2021 (including
the cover page, all appendices and all information incorporated therein and any supplements or
amendments thereto and as disseminated in its printed physical form or in electronic form in all
respects materially consistent with such physical form, the “Preliminary Official Statement”) that
the City has deemed “final” as of its date, for purposes of Rule 15c2-12 except for certain omissions
permitted to be omitted therefrom by Rule 15c2-12. The City hereby agrees to deliver or cause to be
delivered to the Underwriter, within seven (7) business days of the date hereof, copies of the final
official statement, dated the date hereof, relating to the Bonds (including all information previously
permitted to have been omitted by Rule 15c2-12, the cover page, all appendices, all information
incorporated therein and any amendments or supplements as have been approved by the City and the
Underwriter (the “Official Statement”)) in such quantity as the Underwriter shall reasonably request
to comply with Rule 15c2-12(b)(4) and the rules of the Municipal Securities Rulemaking Board (the
“MSRB”). To the extent required by applicable MSRB Rules, the City hereby confirms that it does
not object to distribution of the Official Statement in electronic form.
Section 5. Closing. At 8:00 a.m., California time, on __________, 2021, or at such
other time or date as the City and the Underwriter mutually agree upon, the City shall deliver or
cause to be delivered to the Trustee, and the Trustee shall deliver or cause to be delivered through the
facilities of The Depository Trust Company, New York, New York (“DTC”), the Bonds in definitive
form, duly executed and authenticated. Concurrently with the delivery of the Bonds, the City shall
deliver the documents hereinafter mentioned at the offices of Stradling Yocca Carlson & Rauth,
Newport Beach, California (“Bond Counsel”) or another place to be mutually agreed upon by the
City and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of
the Bonds as set forth in Section 1 hereof by wire transfer in immediately available funds. This
payment for and delivery of the Bonds, together with the delivery of the aforementioned documents
referenced herein, is called the “Closing.”
The Bonds shall be registered in the name of Cede & Co., as nominee of DTC in
denominations of $5,000 and any integral multiple thereof as provided in the Trust Agreement, and
shall be made available to the Underwriter at least one (1) business day before the Closing for
purposes of inspection and packaging. The City acknowledges that the services of DTC will be used
initially by the Underwriter to permit the issuance of the Bonds in book-entry form, and agrees to
cooperate fully with the Underwriter in employing such services.
Section 6. Representations, Warranties and Covenants of the City. The City
represents, warrants and covenants to the Underwriter as follows.
(a) The City is a charter city and municipal corporation of the State of California (the
“State”), duly organized and validly existing pursuant to the Constitution and laws of the State and
its charter.
(b) The City had full legal right, power and authority to adopt Resolution No. ____,
adopted by a majority of the City Council on ________, 2021 (the “Resolution”), and the City has,
and at the Closing Date will have, full legal right, power and authority (i) to execute and deliver the
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4821-4853-6027v3/200434-0005
Trust Agreement, the Continuing Disclosure Certificate relating to the Bonds (the “Continuing
Disclosure Certificate”) and this Purchase Agreement (collectively, the “Legal Documents”), to
perform its obligations under the Legal Documents, and has by official action duly authorized and
approved the execution and delivery of, and the performance by the City of the obligations on its part
contained in the Legal Documents, (ii) to issue, sell and deliver the Bonds to the Underwriter as
provided herein, and (iii) to carry out, give effect to and consummate the transactions contemplated
by the Legal Documents and the Resolution.
(c) The City Council has duly and validly adopted the Resolution at a meeting of the City
Council duly noticed and at which a quorum was present, and the Resolution has not been modified
or amended and is in full force and effect, and has duly approved the execution and delivery of the
Bonds and the other Legal Documents, and the performance by the City of its obligations contained
therein, and the taking of any and all action as may be necessary to carry out, give effect to and
consummate the transactions contemplated by each of said documents.
(d) The Bonds and the other Legal Documents have been, on or before the Closing Date
will be, duly executed and delivered by the City, and, on the Closing Date, the Bonds, when
authenticated and delivered to the Underwriter in accordance with the Trust Agreement, and the other
Legal Documents will constitute legally valid and binding obligations, enforceable against the City in
accordance with their respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws or equitable principles relating to or limiting
creditors’ rights generally.
(e) The City is, and at the Closing Date will be, in compliance, in all respects, with the
Legal Documents.
(f) To the best of its knowledge, the City is not in breach of or default under any
applicable law or administrative regulation of the State or the United States of America or any
applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or
other instrument to which the City is a party or is otherwise subject, and no event has occurred and is
continuing which, with the passage of time or the giving of notice, or both, would constitute a default
or an event of default under any such instrument, in each case which breach or default has or may
have a material adverse effect on the ability of the City to perform its obligations under the Legal
Documents.
(g) After due inquiry, except as may be required under blue sky or other securities laws
of any state, there is no consent, approval, authorization or other action by any governmental or
regulatory authority having jurisdiction over the City, other than the City Council, that has not been
obtained is or will be required for the issuance and delivery of the Bonds or the consummation by the
City of the other transactions contemplated by the Trust Agreement.
(h) The adoption of the Resolution and the execution and delivery by the City of the
Legal Documents and the approval by the City of the Official Statement and compliance with the
provisions on the City’s part contained in the Legal Documents, will not conflict with, or result in a
violation or breach of, or constitute a default under, any law, administrative regulation, judgment,
decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other
instrument to which the City is a party or is otherwise subject to, which conflict, breach or default
has or may have a material adverse effect on the ability of the City to carry out its obligations under
the Legal Documents, nor will any such execution, delivery, adoption or compliance result in the
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4821-4853-6027v3/200434-0005
creation or imposition of any material lien, charge or other security interest or encumbrance of any
nature whatsoever upon any of the properties or assets of City under the terms of any such law,
administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note,
resolution, agreement or other instrument, except as provided by the Legal Documents.
(i) Prior to the date hereof, the City has provided to the Underwriter for its review the
Preliminary Official Statement, that the City has deemed final for purposes of Rule 15c2-12, has
approved the distribution of the Preliminary Official Statement and the Official Statement, and has
duly authorized the execution and delivery of the Official Statement (including in electronic form).
The Preliminary Official Statement, at the date thereof, and as of the date hereof, did not and does
not contain any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein (other than the information relating to DTC and its book-entry system, as
to which no view is expressed), in light of the circumstances under which they were made, not
misleading. As of the date hereof and on the Closing, the Official Statement did not and will not
contain any untrue statement of a material fact or omit to state any material fact necessary to make
the statements therein (other than the information relating to DTC and its book-entry system, as to
which no view is expressed), in light of the circumstances under which they were made, not
misleading.
(j) By official action of the City prior to or concurrently with the acceptance hereof, the
City has duly approved the distribution of the Preliminary Official Statement and the distribution of
the Official Statement (including in electronic form), and has duly authorized and approved the
execution and delivery of, and the performance by the City of the obligations on its part contained, in
the Legal Documents.
(k) The City will advise the Underwriter promptly of any proposal to amend or
supplement the Official Statement and will not effect or consent to any such amendment or
supplement without the consent of the Underwriter, which consent will not be unreasonably
withheld. The City will advise the Underwriter promptly of the institution of any proceedings known
to it by any governmental authority prohibiting or otherwise affecting the use of the Official
Statement in connection with the offering, sale or distribution of the Bonds.
(l) The financial statements relating to the receipts, expenditures and cash balances of
the City as of June 30, 2020 as set forth in the Preliminary Official Statement and in the Official
Statement fairly represent the financial position and results of operations of the City as of the dates
and for the periods therein set forth in accordance with generally accepted accounting principles.
Except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise
disclosed in writing to the Underwriter, there has not been any materially adverse change in the
financial position and results of operations of the City or in its operations since June 30, 2020 and,
except as disclosed in the Preliminary Official Statement, the Official Statement or otherwise
disclosed in writing to the Underwriter, there has been no occurrence, circumstance or combination
thereof which is reasonably expected to result in any such materially adverse change.
(m) As of the time of acceptance hereof and as of the date of Closing, no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency,
public board or body, is pending or, to the knowledge of the City, threatened (i) in any way
questioning the corporate existence of the City or the titles of the officers of the City to their
respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the execution or
delivery of any of the Bonds, or in any way contesting or affecting the validity of the Bonds or the
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Legal Documents or the consummation of the transactions contemplated thereby or contesting the
power of the City to enter into the Legal Documents; (iii) which may result in any material adverse
change to the financial condition of the City or to its ability to make payment of principal or
redemption price of and interest on the Bonds when due; or (iv) contesting the completeness or
accuracy of the Preliminary Official Statement or the Official Statement or any supplement or
amendment thereto or asserting that the Preliminary Official Statement or the Official Statement
contained any untrue statement of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry
or investigation of the nature described in clause (i) through (iv) of this sentence.
(n) To the extent required by law, the City will undertake, pursuant to the Continuing
Disclosure Certificate, to provide annual reports and notices of certain events. A description of this
undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official
Statement. Except as otherwise disclosed in the Preliminary Official Statement, the City has not
failed to comply in all material respects with any previous undertakings with regard to Rule 15c2-12
to provide annual reports or notices of enumerated events in the past five years and, the City has been
in material compliance during the past five years with its continuing disclosure obligations in
accordance with Rule 15c2-12.
(o) Any certificate signed by any officer of the City authorized to execute such certificate
in connection with the issuance, sale and delivery of the Bonds and delivered to the Underwriter shall
be deemed a representation and warranty of the City to the Underwriter as to the statements made
therein but not of the person signing such certificate.
(p) The City will promptly apply the proceeds of the Bonds to refund the Unfunded
Liability as of the date of issuance of the Bonds and to pay costs associated with the issuance and
delivery of the Bonds.
(q) During the period from the date hereof until the Closing Date, the City agrees to
furnish the Underwriter with copies of any documents it files with any regulatory authority which are
reasonably requested by the Underwriter.
(r) The City is not in material default, nor has the City been in material default at any
time, as to the payment of principal or interest with respect to a material obligation issued by the City
or with respect to a material obligation guaranteed by the City as guarantor.
(s) As of the date hereof, the City does not have any revenue bonds, capital lease
obligations, installment payment obligations or other material financial obligation, nor other material
obligations secured by payments from the general fund of the City, except as disclosed in the
Preliminary Official Statement and the Official Statement.
(t) The default judgment dated __________, 2021 entered in favor of the City in
connection with City of Santa Ana v. All Persons Interested, etc. was duly entered, the appeal period
has run without any appeal having been filed, and the default judgment is in full force and effect.
(u) The City had, prior to the adoption of the Resolution, and has, in full force and effect,
a Debt Management Policy that complies with Government Code section 8855(i).
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Section 7. Conditions to the Obligations of the Underwriter. The Underwriter has
entered into this Purchase Agreement in reliance upon the representations and warranties of the City
contained herein. The obligations of the Underwriter to accept delivery of and pay for the Bonds on
the date of the Closing shall be subject, at the option of the Underwriter, to the accuracy in all
respects of the statements of the officers and other officials of the City, as well as authorized
representatives of the City Attorney, Bond Counsel, Disclosure Counsel and the Trustee made in any
certificates or other documents furnished pursuant to the provisions hereof, to the performance by the
City of its obligations to be performed hereunder at or prior to the date of the Closing, and to the
following additional conditions:
(a) The representations, warranties and covenants of the City contained herein shall be
true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of
the Closing;
(b) At the time of Closing, the Legal Documents shall be in full force and effect as valid
and binding agreements between or among the various parties thereto, and the Legal Documents and
the Preliminary Official Statement and the Official Statement shall not have been amended, modified
or supplemented except as may have been agreed to in writing by the Underwriter, and all such
reasonable actions as, in the opinion of Bond Counsel, shall reasonably deem necessary in
connection with the transactions contemplated hereby;
(c) At the time of the Closing, no default shall have occurred or be existing under the
Legal Documents, or any other agreement or document pursuant to which any of the City’s financial
obligations were executed and delivered, and the City shall not be in default in the payment of
principal or interest with respect to any of its financial obligations, which default would result in any
material adverse change to the financial condition of the City or adversely impact its ability to make
payment of principal or redemption price of and interest on the Bonds when due;
(d) In recognition of the desire of the City and the Underwriter to effect a successful
public offering of the Bonds, and in view of the potential adverse impact of any of the following
events on such a public offering, this Purchase Agreement shall be subject to termination in the
absolute discretion of the Underwriter by notification, in writing, to the City prior to delivery of and
payment for the Bonds, if at any time prior to such time, regardless of whether any of the following
statements of fact were in existence or known of on the date of this Purchase Agreement:
(i) there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States of America of a national emergency or war or other calamity or crisis the effect
of which on financial markets is materially adverse such as to make it, in the sole judgment of the
Underwriter, impractical to proceed with the purchase or delivery of the Bonds as contemplated by
the Official Statement (exclusive of any amendment or supplement thereto); or
(ii) a general banking moratorium shall have been declared by federal, State or
New York authorities, or the general suspension of trading on any national securities exchange; or
(iii) any event shall occur which makes untrue any statement or results in an
omission to state a material fact necessary to make the statements in the Preliminary Official
Statement and the Official Statement, in the light of the circumstances under which they were made,
not misleading, which event, in the reasonable opinion of the Underwriter would materially or
adversely affect the ability of the Underwriter to market the Bonds; or
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(iv) any legislation, ordinance, rule or regulation shall be introduced in, or be
enacted by any governmental body, department or agency of the State, or a decision by any court of
competent jurisdiction within the State shall be rendered which materially adversely affects the
market price of the Bonds; or
(v) the marketability of the Bonds or the market price thereof, in the reasonable
opinion of the Underwriter, has been materially adversely affected by an amendment to the
Constitution of the United States of America or by any legislation in or by the Congress of the United
States of America or by the State, or the amendment of legislation pending as of the date of this
Purchase Agreement in the Congress of the United States of America, or the recommendation to
Congress or endorsement for passage (by press release, other form of notice or otherwise) of
legislation by the President of the United States of America, the Treasury Department of the United
States of America, the Internal Revenue Service or the Chairman or ranking minority member of the
Committee on Finance of the United States Senate or the Committee on Ways and Means of the
United States House of Representatives, or the proposal for consideration of legislation by either
such Committee or by any member thereof, or the presentment of legislation for consideration as an
option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress
of the United States of America, or the favorable reporting for passage of legislation to either House
of the Congress of the United States of America by a Committee of such House to which such
legislation has been referred for consideration; or
(vi) an order, decree or injunction shall have been issued by any court of
competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement
or other form of notice or communication issued or made by or on behalf of the Securities and
Exchange Commission, or any other governmental agency having jurisdiction of the subject matter,
to the effect that: (i) obligations of the general character of the Bonds, or the Bonds, including any or
all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as
amended, or that the Trust Agreement is not exempt from qualification under the Trust Indenture Act
of 1939; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or
the issuance, offering or sale of the Bonds, including any or all underlying obligations, as
contemplated hereby or by the Preliminary Official Statement and the Official Statement, is or would
be in violation of the federal securities laws as amended and then in effect; or
(vii) legislation shall be introduced, by amendment or otherwise, or be enacted by
the House of Representatives or the Senate of the Congress of the United States of America, or a
decision by a court of the United States of America shall be rendered, or a stop order, ruling,
regulation or official statement by or on behalf of the Securities and Exchange Commission or other
governmental agency having jurisdiction of the subject matter shall be made or proposed, to the
effect that the issuance, offering or sale of obligations of the general character of the Bonds, as
contemplated hereby or by the Preliminary Official Statement and the Official Statement, is or would
be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the
Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of
1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the
issuance, offering or sale of the Bonds or obligations of the general character of the Bonds, as
contemplated hereby or by the Preliminary Official Statement and the Official Statement; or
(viii) additional material restrictions not in force as of the date hereof shall have
been imposed upon trading in securities generally by any governmental authority or by any national
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securities exchange, which, in the Underwriter’s reasonable opinion, materially adversely affects the
marketability or market price of the Bonds; or
(ix) the New York Stock Exchange, or other national securities exchange or
association or any governmental authority, shall impose as to the Bonds, or obligations of the general
character of the Bonds, any material restrictions not now in force, or increase materially those now in
force, with respect to the extension of credit by or the charge to the net capital requirements of broker
dealers; or
(x) trading in securities on the New York Stock Exchange or the American Stock
Exchange shall have been suspended or limited or minimum prices have been established on either
such exchange which, in the Underwriter’s reasonable opinion, materially adversely affects the
marketability or market price of the Bonds; or
(xi) any rating of the Bonds or the rating of any general fund obligations of the
City shall have been downgraded or withdrawn by a national rating service, which, in the reasonable
opinion of the Underwriter, materially adversely affects the market price of the Bonds; or
(xii) any action shall have been taken by any government in respect of its
monetary affairs which, in the reasonable opinion of the Underwriter, has a material adverse effect on
the United States securities market, rendering the marketing and sale of the Bonds, or enforcement of
sale contracts with respect thereto impracticable; or
(xiii) the commencement of any action, suit or proceeding described in
Section 6(m).
(e) At or prior to the Closing, the Underwriter shall receive or have received the
following documents, in each case to the reasonable satisfaction, in form and substance, of the
Underwriter and ___________________, __________, California (“Underwriter’s Counsel”):
(i) a copy of the default judgment, dated ________, 2021, entered in favor of the
City in connection with City of Santa Ana v. All Persons Interested, etc., Case No _____________
filed in the Superior Court of California, County of Orange;
(ii) all resolutions relating to the Bonds adopted by the City and certified by an
authorized official of the City, authorizing the execution and delivery of the Legal Documents and
the delivery of the Bonds and the Official Statement;
(iii) the Legal Documents duly executed and delivered by the respective parties
thereto, with only such amendments, modifications or supplements as may have been agreed to in
writing by the Underwriter; and
(iv) the approving opinion of Bond Counsel, dated the date of Closing and
addressed to the City, in substantially the form attached as Appendix [B] to the Preliminary the
Official Statement and the Official Statement, together with a reliance letter thereon addressed to the
Underwriter;
(v) a supplemental opinion of Bond Counsel dated the date of Closing and
addressed to the Underwriter, to the effect that:
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(A) the statements on the cover of the Official Statement and in the
Official Statement under the captions [“INTRODUCTION,” “THE BONDS,” “SECURITY AND
SOURCE OF PAYMENT FOR THE BONDS,” “VALIDATION,” and “TAX MATTERS,” and in
APPENDIX C — “SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT,”
APPENDIX D — “PROPOSED FORM OF BOND COUNSEL OPINION” and APPENDIX E —
“FORM OF CONTINUING DISCLOSURE CERTIFICATE,”] and excluding any material that may
be treated as included under such captions and appendices by any cross-reference, insofar as such
statements expressly summarize provisions of the Bonds, the Trust Agreement, and Bond Counsel’s
final opinion relating to the Bonds, are accurate in all material respects as of the date of Closing;
(B) this Purchase Agreement has been duly authorized, executed and
delivered by the City and is the valid, legal and binding agreement of the City enforceable in
accordance with its terms, except that the rights and obligations under the Purchase Agreement are
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other
similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies
are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal
remedies against public agencies in the State, and provided that no opinion is expressed with respect
to any indemnification or contribution provisions contained therein; and
(C) the Bonds are not subject to the registration requirements of the
Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification under the
Trust Indenture Act of 1939, as amended;
(vi) the Official Statement, executed on behalf of the City;
(vii) evidence that the rating on the Bonds is as described in the Official
Statement;
(viii) a certificate, dated the date of Closing, signed by a duly authorized officer of
the City satisfactory in form and substance to the Underwriter to the effect that: (i) the
representations, warranties and covenants of the City contained in this Purchase Agreement are true
and correct in all material respects on and as of the date of Closing with the same effect as if made on
the date of the Closing by the City, and the City has complied with all of the terms and conditions of
the Purchase Agreement required to be complied with by the City at or prior to the date of Closing;
(ii) to the best of such officer’s knowledge, no event affecting the City has occurred since the date of
the Official Statement which should be disclosed in the Official Statement for the purposes for which
it is to be used or which is necessary to disclose therein in order to make the statements and
information therein not misleading in any material respect; (iii) the information and statements
contained in the Official Statement (other than information relating to DTC and its book entry
system) did not as of its date and do not as of the Closing contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading in any material respect; (iv) the City is
not in breach of or default under any applicable law or administrative regulation of the State or the
United States of America or any applicable judgment or decree or any loan agreement, indenture,
bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise
subject, which would have a material adverse impact on the City’s ability to perform its obligations
under the Legal Documents, and no event has occurred and is continuing which, with the passage of
time or the giving of notice, or both, would constitute such a default or an event of default under any
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such instrument; and (v) no further consent is required for inclusion of its audited financial
statements in the Preliminary Official Statement and the Official Statement;
(ix) an opinion dated the date of Closing and addressed to the Underwriter, the
Trustee and the Bond Counsel, of the City Attorney of the City of Santa Ana, substantially in the
form attached as Exhibit B hereto;
(x) a letter of Stradling Yocca Carlson & Rauth, Newport Beach, California,
Disclosure Counsel to the City dated the date of Closing and addressed to the Underwriter
substantially to the effect that, on the basis of the information made available to them in the course of
their participation in the preparation of the Official Statement as disclosure counsel, but without
having undertaken to determine or verify independently, or assuming any responsibility for, the
accuracy, completeness or fairness of any of the statements contained in the Official Statement, no
facts have come to the attention of the personnel in such firm directly involved in rendering legal
advice and assistance to the City in connection with the preparation of the Official Statement which
caused them to believe that (A) the Preliminary Official Statement as of its date or as of ________,
2021 (excluding therefrom financial, demographic and statistical data; forecasts, projections,
estimates, assumptions and expressions of opinions; statements relating to DTC, Cede & Co. and the
operation of the book-entry system; statements relating to the treatment of the Bonds or the interest,
discount or premium, if any, thereon or therefrom for tax purposes under the law of any jurisdiction;
and the statements contained in the Preliminary Official Statement under the captions [“TAX
MATTERS,”] and in [Appendix A and Appendices C through F] to the Preliminary Official
Statement; as to all of which they express no view) contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading, except for such information as is
permitted to be excluded from the Preliminary Official Statement pursuant to Rule 15c2-12 of the
Securities Exchange Act of 1934, as amended, including but not limited to information as to pricing,
yields, interest rates, maturities, amortization, redemption provisions, debt service requirements,
Underwriter’s discount and CUSIP numbers or (B) the Official Statement as of its date or as of the
Closing Date (excluding therefrom financial, demographic and statistical data; forecasts, projections,
estimates, assumptions and expressions of opinions; statements relating to DTC, Cede & Co. and the
operation of the book-entry system, statements relating to the treatment of the Bonds or the interest,
discount or premium, if any, thereon or therefrom for tax purposes under the law of any jurisdiction;
and the statements contained in the Official Statement under the captions [“TAX MATTERS,”] and
in [Appendix A and Appendices C through F] to the Official Statement; as to all of which they
express no view) contained any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading;
(xi) an opinion of counsel to the Trustee, addressed to the Underwriter and the
City, dated the date of the Closing, to the effect that:
(A) the Trustee is a national banking association duly organized and
validly existing under the laws of the United States of America, having full corporate power to
undertake the trust created under the Trust Agreement;
(B) the Trust Agreement has been duly authorized, executed and
delivered by the Trustee and, assuming due authorization, execution and delivery by the other parties
thereto, the Trust Agreement constitutes the valid, legal and binding obligations of the Trustee
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enforceable in accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by
the application of equitable principles, if equitable remedies are sought;
(C) the Trustee has duly authenticated the Bonds upon the order of City;
(D) the Trustee’s actions in executing and delivering the Trust Agreement
are in full compliance with, and do not conflict with any applicable law or governmental regulation
and, to the best of such counsel’s knowledge, after reasonable inquiry with respect thereto, do not
conflict with or violate any contract to which the Trustee is a party or any administrative or judicial
decision by which the Trustee is bound;
(E) no consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over the banking or trust powers of the
Trustee that has not been obtained is or will be required for the execution and delivery of the Bonds
or the consummation by the Trustee of its obligations under the Trust Agreement; and
(F) there is no action, suit, proceeding, inquiry or investigation at law or
in equity before or by any court or public body pending or, to the best of such counsel’s knowledge,
threatened against or affecting the Trustee, which would materially adversely impact the Trustee’s
ability to complete the transactions contemplated by the Trust Agreement.
(xii) a certificate, dated the date of Closing, signed by a duly authorized officer of
the Trustee satisfactory in form and substance to the Underwriter, to the effect that:
(A) the Trustee is duly organized and existing as a national banking
association under the laws of the United States of America, having the full corporate power and
authority to enter into and perform its duties under the Trust Agreement;
(B) the Trustee is duly authorized to enter into the Trust Agreement and
has duly executed and delivered the Trust Agreement, and assuming due authorization and execution
by the other parties thereto, the Trust Agreement is legal, valid and binding upon the Trustee and
enforceable against such party in accordance with its terms;
(C) the Trustee has duly authenticated the Bonds under the Trust
Agreement and delivered the Bonds to or upon the order of the Underwriter;
(D) no consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over the banking or trust powers of the
Trustee that has not been obtained is required for the execution and delivery of the Bonds or the
consummation by the Trustee of its obligations under the Trust Agreement; and
(E) there is no action, suit, proceeding, inquiry or investigation at law or
in equity before or by any court or public body pending or, to the best of such counsel’s knowledge,
threatened against or affecting the Trustee, which would materially adversely impact the Trustee’s
ability to complete the transactions contemplated by the Trust Agreement.
(xiii) the preliminary and final forms required to be delivered to the California Debt
and Investment Advisory Commission pursuant to section 53583 of the Government Code of the
State of California and section 8855(i) and (j) of the Government Code;
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(xiv) a copy of the executed Blanket Issuer Letter of Representations by and
between the City and DTC relating to the book-entry system;
(xv) an opinion of ____________, __________, California, as Underwriter’s
Counsel, in form and substance acceptable to the Underwriter, substantially to the effect that:
(A) the Bonds are exempt from registration pursuant to the Securities Act
of 1933, as amended, and the Trust Agreement is exempt from qualification pursuant to the Trust
Indenture Act of 1939, as amended;
(B) based upon an examination which they have made, and without
having undertaken to determine independently or assuming any responsibility for the accuracy or
completeness or fairness of the statements, and based on its participation in the conferences (which
did not extend beyond the date of the Official Statement), and in reliance thereon, on oral and written
statements and representations of the City and others and on the records, documents, certificates,
opinions and matters therein mentioned, such counsel advises the Underwriter as a matter of fact and
not opinion that, during the course of such counsel’s representation of the Underwriter on this matter,
(a) as of the date of the Preliminary Official Statement and as of ________, 2021, no facts had come
to the attention of the attorneys in such counsel’s firm rendering legal services to the Underwriter in
connection with the Preliminary Official Statement which caused it to believe that the Preliminary
Official Statement contained any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, and (b) as of the date of the Official Statement and as of the Closing Date, no
facts had come to the attention of the attorneys in such counsel’s firm rendering legal service to the
Underwriter in connection with the Official Statement which caused it to believe as of the date of the
Official Statement and as of the Closing Date that the Official Statement contained or contains any
untrue statement of a material fact or omitted or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading;
provided that, such counsel expressly excludes from the scope of this paragraph and expresses no
view or opinion about (i) with respect to the Preliminary Official Statement, any difference in
information contained therein compared to what is contained in the Official Statement, whether or
not related to pricing or sale of the Bonds, and whether any such difference is material and should
have been included in the Preliminary Official Statement, and (ii) with respect to both the
Preliminary Official Statement and the Official Statement, any CUSIP numbers, financial,
accounting, statistical or economic, engineering or demographic data or forecasts, numbers, charts,
tables, graphs, estimates, projections, assumptions or expressions of opinion, management discussion
and analysis, environmental matters, environmental litigation, any statements about compliance with
prior continuing disclosure undertakings, information relating to DTC and its book-entry system,
[Appendix A and Appendices C through F] thereto, and information relating to ratings, rating
agencies, tax exemption, included or referred to therein or omitted therefrom, which such counsel
expressly excludes from the scope of this paragraph and as to which such counsel expresses no
opinion or view, and no responsibility is undertaken or view expressed with respect to any other
disclosure document, materials or activity, or as to any information from another document or source
referred to by or incorporated by reference in the Preliminary Official Statement or the Official
Statement; and
(C) the Continuing Disclosure Certificate, together with Section 5(o) of
this Purchase Agreement, satisfies the requirements contained in Rule 15c2-12 for an undertaking for
the benefit of the holders of the Bonds to provide the information at the times and in the manner
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required by Rule 15c2-12; provided that, for purposes of such opinion, Underwriter’s Counsel will
not be expressing any view regarding the content of the Official Statement that is not expressly stated
in numbered clause (ii) above;
(xvi) a Rule 15c2-12 certificate, dated the date of the Preliminary Official
Statement and executed by the City;
(xvii) a certificate of the PERS actuary setting forth the amount of the discounted
prepayment of the annual contribution of the City to the System for Fiscal Year 2021-22 together
with acknowledgment of payment of the Unfunded Liability;
(xviii) such additional legal opinions, Bonds, proceedings, instruments or other
documents as the Underwriter or Underwriter’s Counsel may reasonably request.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, this
Purchase Agreement shall terminate, and except as set forth in Section 9 hereof, neither the
Underwriter nor the City shall be under further obligation hereunder.
Section 8. Changes in Official Statement. Within 90 days after the Closing or within
25 days following the “end of the underwriting period” (as defined in Rule 15c2-12), whichever
occurs first, if any event relating to or affecting the Bonds, the Trustee, or the City shall occur as a
result of which it is necessary, in the reasonable opinion of the Underwriter, to amend or supplement
the Official Statement in order to make the Official Statement not misleading in any material respect
in the light of the circumstances existing at the time it is delivered to a purchaser, the City will
forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or
supplement the Official Statement so that it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Official Statement is delivered to purchaser, not misleading.
The City shall cooperate with the Underwriter in the filing by the Underwriter of such amendment or
supplement to the Official Statement with the MSRB. The Underwriter acknowledges that the “end
of the underwriting period” will be the date of Closing unless the Underwriter otherwise notifies the
City in writing that it still owns some or all of the Bonds.
Section 9. Expenses.
(a) Whether or not the Underwriter accepts delivery of and pays for the Bonds as set
forth herein, it shall be under no obligation to pay, and the City shall pay out of the proceeds of the
Bonds or any other legally available funds of the City, all expenses incidental to the performance of
the City’s obligations hereunder, including but not limited to the cost of printing and delivering the
Legal Documents to the Underwriter, the costs of printing and shipping and electronic distribution of
the Preliminary Official Statement and the Official Statement in reasonable quantities, the fees and
disbursements of the City, the Trustee and its counsel, Bond Counsel, Disclosure Counsel, City
Attorney, the City’s actuary, accountants, engineers, appraisers, economic consultants and any other
experts or consultants retained by the City in connection with the issuance and sale of the Bonds,
rating agency fees, advertising expenses, and any other expenses not specifically enumerated in
paragraph (b) of this section incurred in connection with the issuance and sale of the Bonds. The
City shall pay out of the proceeds of the Bonds, for any expenses incurred by the Underwriter on
behalf of the City’s employees and representatives which are incidental to implementing this
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Purchase Agreement, including meals, transportation, and lodging of those employees and
representatives.
(b) Whether or not the Bonds are delivered to the Underwriter as set forth herein, the
City shall be under no obligation to pay, and the Underwriter shall be responsible for and pay (which
may be included as an expense component of the Underwriter’s discount), MSRB, CUSIP Bureau
and CDIAC fees and expenses to qualify the Bonds for sale under any “blue sky” laws, and all other
expenses incurred by the Underwriter in connection with its public offering and distribution of the
Bonds not specifically enumerated in paragraph (a) of this section, including the cost of preparing
this Purchase Agreement and other Underwriter documents, travel expenses and the fees and
disbursements of Underwriter’s Counsel.
Section 10. Notices. Any notice or other communication to be given to the Underwriter
under this Purchase Agreement may be given by delivering the same in writing to _______________,
______________, __________, California _____, Attention: _________. Any notice or
communication to be given to the City under this Purchase Agreement may be given by delivering
the same in writing to the City of Santa Ana, at the address first set forth above, Attention: City
Manager. All notices or communications hereunder by any party shall be given and served upon
each other party.
Section 11. Parties in Interest. This Purchase Agreement is made solely for the benefit
of the City and the Underwriter (including the successors or assigns thereof) and no other person
shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and
agreements of the City in this Purchase Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Underwriter and shall survive the
delivery of and payment for the Bonds.
Section 12. Counterparts. This Purchase Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same instrument.
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Section 13. Governing Law. This Purchase Agreement shall be governed by and
construed in accordance with the laws of the State.
_________________________
By:
Authorized Officer
Accepted:
CITY OF SANTA ANA
By:
City Manager
Time of Execution: ____:____
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EXHIBIT A
MATURITY SCHEDULE
Maturity Date
([July] 1) Principal Amount Interest Rate Yield
$ % %
$________ ______% Term Bond due [July] 1, 20__; Yield _____%; Price 100.000%
$________ ______% Term Bond due [July] 1, 20__; Yield _____%; Price 100.000%
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EXHIBIT B
FORM OF CITY ATTORNEY OPINION
________, 2021
City of Santa Ana
Santa Ana, California
20 Civic Center Plaza
Santa Ana, California 92701
City of Santa Ana
City of Santa Ana Taxable Pension Obligation Bonds, Series 2021
Ladies and Gentlemen:
I am the duly appointed City Attorney for the City of Santa Ana (the “City”) and I have
represented the City in connection with the issuance and sale by the City of $________ aggregate
principal amount of its City of Santa Ana Taxable Pension Obligation Bonds, Series 2021 (the
“Bonds”). I have examined and relied upon originals (or copies certified or otherwise identified to
our satisfaction) of such documents, records and other instruments as I deem necessary or appropriate
for the purposes of this opinion, including, without limitation: (i) those documents relating to the
existence, organization and operation of the City; (ii) Resolution No. ____, adopted by a majority of
the City Council of the City (the “City Council”) on ________, 2021 (the “Resolution”); (iii) all
necessary documentation of the City relating to the authorization, execution and delivery of the Trust
Agreement, dated as of _______ 1, 2021 (the “Trust Agreement”), between the City and U.S. Bank
National Association, as trustee; (iv) the default judgment dated ________, 2021, entered in favor of
the City in connection with City of Santa Ana v. All Persons Interested, etc., Case
No. _____________ filed in the Superior Court of California, County of Orange; (v) the Purchase
Agreement, dated ________, 2021 (the “Purchase Agreement”), executed by _______________ (the
“Representative”), and accepted by the City; (vi) the Preliminary Official Statement, dated
________, 2021 (the “Preliminary Official Statement”), relating to the Bonds; (vii) the Official
Statement, dated ________, 2021 (the “Official Statement”), relating to the Bonds; (viii) the
Continuing Disclosure Certificate, dated ________, 2021 (the “Continuing Disclosure Certificate”),
of the City appointing [Urban Futures, Inc.], as dissemination agent; and (ix) such other records,
documents, certificates, opinions, and other matters as are in our judgment necessary or appropriate
to enable us to render the opinions expressed herein. All capitalized terms used herein and not
otherwise defined shall have the meaning given to such terms as set forth in the Trust Agreement.
Based on the foregoing, and with regard to State of California (the “State”) law and United
States federal law, I am of the opinion that:
(a) The City is a charter city and municipal corporation of the State, duly organized and
validly existing pursuant to the Constitution and laws of the State and its charter.
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(b) The resolution of the City approving and authorizing the execution and delivery of
the Bonds, the Trust Agreement, the Purchase Agreement, and the Continuing Disclosure Certificate
(collectively, the “Legal Documents”) and approving and authorizing the issuance of the Bonds and
the delivery of the Official Statement and other actions of the City was duly adopted at a meeting of
the governing body of the City which was called and held pursuant to law and with all public notice
required by law and at which a quorum was present and acting throughout, and the resolution is now
in full force and effect and has not been amended or superseded in any way.
(c) Except as disclosed in the Preliminary Official Statement and in the Official
Statement, there is no action, suit or proceeding pending and served on the City, or to the best of my
knowledge, threatened against the City to (i) restrain or enjoin the execution or delivery of the Legal
Documents (ii) in any way contesting or affecting the validity of the Legal Documents, the
Resolution or the authority of the City to enter into the Legal Documents, or (iii) in any way
contesting or affecting the powers of the City in connection with any action contemplated by the
Official Statement, the Resolution or the Legal Documents.
(d) The execution and delivery of the Legal Documents and compliance with the
provisions thereof, do not and will not in any material respect conflict with or constitute on the part
of the City a breach of or default under any agreement or other instrument to which the City is a
party or by which it is bound or any existing law, regulation, court order or consent decree to which
the City is subject, which breach or default has or may have a material adverse effect on the ability of
the City to perform its obligations under the Legal Documents.
(e) No authorization, approval, consent, or other order of the State or any other
governmental body within the State is required for the valid authorization, execution and delivery of
the Legal Documents or the consummation by the City of the transactions on its part contemplated
therein, except such as have been obtained and except such as may be required under state securities
or blue sky laws in connection with the purchase and distribution of the Bonds by the Underwriter, as
to which I express no opinion.
Very truly yours,
EXHIBIT A
GOOD FAITH ESTIMATES
The good faith estimates set forth herein are provided with respect to the Bonds in accordance
with California Government Code Section 5852.1. Such good faith estimates have been provided to
the City by Urban Futures, Inc. (the City’s “Municipal Advisor”).
Principal Amount. The Municipal Advisor has informed the City that, based on the City’s
financing plan and current market conditions, it’s good faith estimate of the aggregate principal amount
of the City Bonds to be sold is $671,715,000 (the “Estimated Principal Amount”), which excludes
approximately $ 0 net premium estimated to be generated based on current market conditions.
True Interest Cost of the City Bonds. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the City Bonds is sold, and based on market interest
rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest
cost of the City Bonds, which means the rate necessary to discount the amounts payable on the
respective principal and interest payment dates to the purchase price received for the City Bonds,
is 3.42%.
Finance Charge of the City Bonds. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the City Bonds is sold, and based on market interest
rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge
for the City Bonds, which means the sum of all fees and charges paid to third parties (or costs
associated with the City Bonds), is $2 million.
Amount of Proceeds to be Received. The Municipal Advisor has informed the City that,
assuming that the Estimated Principal Amount of the City is sold, and based on market interest rates
prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds
expected to be received by the City for sale of the City Bonds, less the finance charge of the City
Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the
City Bonds, is $669,702,346..
Total Payment Amount. The Municipal Advisor has informed the City that, assuming that the
Estimated Principal Amount of the City Bonds is sold, and based on market interest rates prevailing at
the time of preparation of such estimate, its good faith estimate of the total payment amount, which
means the sum total of all payments the City will make to pay debt service on the City Bonds, plus the
finance charge for the City Bonds, as described above, not paid with the proceeds of the City Bonds,
calculated to the final maturity of the City Bonds, is $908,497,650.
EXHIBIT 4
CityCouncilMeeting2021March16ofBondsandRelatedAgreementsItem #33 Approve Resolution authorizing issuance
TimelinePROGRESS-IN20212020madeinlateMarch20212. Selection ofUnderwriter willbe1. FinancialAdvisordevelopedanRFPUnderwriter Services–IssueRFPMarchDebtrefinancingtheanalysisrecommendingaPensionStaffandFinancialAdvisorcompleted :DevelopFeasibilityAnalysisDecember-August2. Adopt Policy BondCounselandValidationServices1. Direct Staff to propose acontract for Policy:RefinancingPensionDebt & adopt CityCouncilmeetingConsiderFebruary(RFP)completionofacompetitiveprocesstheCity’s Financial Advisor after CityengagedUrbanFutures, Inc. as Advisor:ApprovecontractforFinancial –CityCouncilMeetingJuly2. Feasibility Analysis (“Policy”)LiabilityCostReductionPolicy1. Unfunded Employee Pension documents:completedrelatedPensionStaffandFinancialAdvisorJanuaryRefinancinganalysistoconsideraPensionDebtDirectStafftoprepareafeasibilityUpdate :Budget -CityCouncilmeetingAprilPensionDebtRefinancing
NextSteps20212021IssueDebtObligationNovemberSafetyMisc. & –22UAL -PayFY2021-3. PreUnfunded Actuarial Liability (UAL)2. Impact ofrateofreturn totheCity’s ended6/30/21-forthefiscalyear1. CalPERS investment rateofreturn UpdatedCalPERSData:July2. Credit Rating Presentation1. Finalize Bond documents InitiateDueDiligenceProcessOctoberSuperiorCourtsdocumentswithCountyofOrangeFileresolutionandrelatedbondProcessInitiateJudicialValidationAprilissuance (50% or90%) 3. Approve an “Upto” amountof Statementandrelateddocuments2. ApprovePreliminaryOfficial 1. Completed Validation Process Underwriter(s):BondDocumentsandApprove -CityCouncilMeetingSeptember-Augustcontract)agreementstrustee & bond purchase issuanceofdebtalongwithrelatedApproveResolutionauthorizingitems:ProcessandapproverelatedRequesttoInitiateValidation –CityCouncilmeetingMarchPensionDebtRefinancing
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